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How What A Car Is Used For Affects Auto Insurance Rates

Monday, July 4th, 2011

Auto insurance quotes will vary across geographic location as well as by vehicle, and auto insurance rates will rise or fall depending on whom in a family is driving a vehicle, for how long, and with what kind of driving experience. Altogether, there are a large number of factors that go into determining just what the auto insurance rates for a particular individual will be, but one of the most important is what exactly the vehicle being insured is going to be used for. This can seriously affect the type of auto insurance quotes that can be found, and the level of auto insurance rates that a driver should expect.

When a policy is purchased, the insurance provider will ask not only how far the vehicle will typically travel, but what its purpose is. For many, their vehicle is simply used to get them to work or school and back, and will travel 20 to 40 miles in day, including stopping for gas and groceries or other incidentals. This is the typical situation that drivers find themselves in, and this results in a middle of the road, or “average,” quote. It is for those who choose to use their vehicle for a business purpose that auto insurance rates will change. If a car or truck is being use to deliver goods or as the mobile portion of a business – for example a service truck or repair vehicle, insurance rates will rise. This happens because the vehicle will be on the road for far longer than the average car, and this in turn raises the chances that an accident or other problem with the vehicle will occur. This increased risk of damage means an increased risk for a company to pay out, and therefore higher premiums are the result.

Some business owners will choose to list the purpose of their vehicle as simply for personal use, and in many cases, this does not result in a problem. An issue can arise, however, if a business vehicle is involved in an accident and a claim must be made. If an adjustor sees a van with tools or other materials in it, branded with a company logo, they will begin to ask questions about just what the vehicle is used for, and if it can be shown that the use of the vehicle fell outside the stated purpose on the insurance application, a claim may be denied.

While it may mean higher auto insurance rates, it is important for drivers to always be upfront with insurance companies about the true purpose of their vehicles – it will save time and effort in the end.

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