Why Small Business Owners Should Consider Titling and Insuring Their Vehicle in the Business’s Name

If you are a small business owner, you wear multiple hats and likely use every available resource; this might include using your personal vehicle. Whether you're making deliveries, visiting clients, or transporting equipment, using your own car seems like the most convenient and cost-effective solution.

But there’s a catch: if you're using your personal vehicle for business purposes, your personal auto insurance may not have you fully protected.

Titling and insuring your vehicle in your business's name can offer enhanced protection, tax benefits, and credibility. Let’s break down why this might be the right move for your business.

1. Liability Protection for Your Personal Assets

When you use a personal vehicle for business and happen to be involved in an accident, your personal insurance may not cover the damages. This is especially true if the vehicle was being used for business activities not disclosed in your policy. Even worse, if you're sued, your personal assets (like your home, savings, or other property) could be at risk.

According to the Insurance Information Institute, nearly 40% of small businesses will experience a liability claim in the next 10 years, ranging from accidents to property damage. Having a commercial auto policy with your business as the named insured provides a layer of separation between your personal and business liabilities.

2. Proper Coverage for Business Use

Personal auto insurance policies typically exclude coverage for business use or significantly limit it. Commercial auto policies are specifically designed to cover business-related risks, such as transporting goods, driving in unfamiliar territories, or higher-than-average mileage.

For example, if your employee borrows your car to make a delivery and gets into an accident, a personal policy may deny the claim. Commercial policies also include coverage for multiple drivers, loading/unloading liability, and tools or equipment carried in the vehicle.

3. Improved Tax Deductions and Business Expense Tracking

When your vehicle is titled and insured in the name of your business, you can often deduct a higher percentage of expenses, including fuel, insurance, maintenance, and depreciation.

The IRS allows businesses to deduct either the standard mileage rate (currently $0.655 per mile in 2023) or actual vehicle expenses. Having the vehicle insured in the company’s name simplifies tracking and documentation, especially during an audit. It also clearly distinguishes between personal and business use, reducing the risk of gray areas.

4. Enhanced Professional Image

A branded vehicle insured and registered under your business name presents a more credible and professional image. Clients are more likely to trust a service provider who operates under a recognized business entity rather than a sole individual. Whether you're a contractor, caterer, or consultant, your vehicle is a rolling billboard. Making it officially part of your business reinforces your brand.

5. Compliance and Contract Requirements

Some industries and clients require proof of commercial auto insurance before allowing you on a job site or signing a contract. Without proper commercial coverage, you may lose out on valuable work.

Additionally, many commercial leases or vendor agreements require business-titled vehicles to carry higher liability limits, which are often unavailable through personal auto policies.

Final Thoughts

While it might seem simpler (and maybe cheaper) to keep your vehicle personal, the long-term risks and missed opportunities can outweigh the short-term savings. Titling and insuring your vehicle under your business ensures you're properly protected and sets your business up for smoother operations and potential tax benefits.

Consider that according an Insureon survey, 52% of small business owners don't have commercial auto insurance. This is in spite of the fact they regularly use vehicles for business. Don’t be part of that statistic.

Take action now. Talk with one of our experienced insurance advisors to determine the best path forward for your business and ensure you’re not leaving anything to chance.