Determining Premiums for Physical Damage Coverage

Premiums for the property coverage portion of the auto insurance policy are based on business use, radius or areas of use, and where there is a combination truck and trailer on gross vehicle weight (GVW) or gross combination weight (GCW).

The three types of business use are service, retail and commercial:

  • Service use refers to vehicles used to transport people, tools, equipment, or supplies to and from a job location.
  • Retail use refers to vehicles that pick up property from or deliver it to individual households.
  • Commercial use is when it does not fit under the service and retail descriptions.

There are three radius classifications:

  • Local--fewer than 50 miles from principal point of garaging.
  • Intermediate--more than 50 and fewer than 200 miles.
  • Long distance--more than 200 miles.

If you use an auto for your business activities, such as transporting supplies or products, visiting customers, etc., you will need to make certain that your automobile insurance policy will protect you from accidents that may occur while on business. In some cases your personal auto insurance policy may also cover the business use of your auto. In other cases depending on your type of business and the kind of vehicles you own, you may need to purchase a separate business auto insurance policy. Check with your insurance agent or insurer to determine which approach would best fit your needs.