What is Considered a Commercial Vehicle?

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Defining the term “commercial vehicle” is a complicated task. Various people define commercial vehicle in different ways. For example, a car insurance agent may define commercial vehicle as any vehicle used for work.

However, an agent at the Department of Motor Vehicles may only include larger trucks and buses in the commercial vehicle definition. The discrepancies happen because commercial vehicles have different regulations, depending on their type. That’s why it’s important for business owners and drivers to understand the many definitions of this term and the regulations that govern each type of commercial vehicle.

Define Commercial Vehicle for Insurance

Insurance companies define commercial vehicle as any car, truck, van, bus or other vehicle that a person uses to conduct business. This determination of what’s a commercial vehicle does not include driving the car to and from work. If that’s the only work-related activity for which someone uses the vehicle, it likely does not need commercial vehicle insurance.

However, vehicles used for other business purposes need additional insurance to operate legally. These include vehicles such as:

  • Trucks used for transporting goods.
  • Hearses.
  • Food trucks.
  • Buses.
  • Moving vans.
  • Agricultural vehicles.
  • Limousines.
  • Garbage trucks.
  • Construction vehicles.

Equipment that meets this commercial vehicle definition needs insurance to be on the road, and it may also need to be covered by business insurance. It’s important that business owners understand what these policies cover, so they can use their benefits when needed.

Read More: What Is Commercial Insurance?

What Commercial Vehicle Insurance Covers

Like personal auto insurance, commercial vehicle insurance policies cover losses if the vehicle is involved in an accident. Depending on the policy the owner selects, the plan can cover the medical needs of people involved in the accident, as well as the cost to repair or replace the vehicle. It also can be liability-only or full-coverage insurance.

The difference is in the scope of coverage. Commercial vehicle policies cover all drivers in the business, not just the owner. These policies also cover damages to any business assets in an accident. For example, if a bakery gets into an accident while transporting a wedding cake, a commercial vehicle policy may cover the cost of the cake, but a personal auto plan likely would not.

Commercial vehicles also are sometimes covered by general business insurance policies. These policies treat commercial vehicles like any other asset in a business. For example, such a policy might cover lost wages and the cost to replace the equipment if someone stole a landscaper’s vehicle and equipment.

Commercial Vehicle Definition for Taxes

Section 179 is part of the United States tax code that allows business owners to deduct the cost of buying certain assets for their companies. This section applies to all tangible property used primarily for business purposes, including the vehicles. Business owners can deduct up to the cost of the new commercial vehicles from their personal tax liability, with an upper limit of $1 million per year.

So, what’s considered a commercial vehicle for tax purposes? It’s any vehicle that’s used more than 50 percent of the time for the business. The Internal Revenue Service limits the percentage of the vehicle cost the owner can deduct to match the percentage of time it is used for business. For example, if the automobile is used 75 percent of the time for business and 25 percent for personal use, the owner can only deduct 75 percent of the cost to purchase the vehicle.

Vehicles Used for Interstate Commerce

Any vehicle that businesses use to conduct interstate commerce is subject to federal regulations regarding commercial vehicles. This commercial vehicle definition includes automobiles that transport any goods or people across state lines. Such vehicles must follow regulations set by the Federal Motor Carrier Safety Administration (FMCSA).

FMCSA regulations cover many of the areas of legally operating commercial vehicles, including:

  • The hours of service each vehicle can have.
  • Identification requirements.
  • Safety equipment that certain vehicles must carry.
  • Which vehicles must go to weigh stations.
  • Driver health and safety.
  • Insurance and registration.

Business owners who engage in interstate commerce should visit the FMCSA website to ensure their vehicles meet all federal regulations.

Commercial Vehicles and Intrastate Commerce

When commercial vehicles stay within a particular state for business purposes, they are not subject to some federal regulations. However, they often must meet similar regulations put forward by state agencies. While commercial vehicle requirements vary from one state to another, they often mirror the federal guidelines.

Types of Commercial Motor Vehicles (CMVs)

For regulatory purposes, CMVs are often divided into two groups: Commercial Driver’s License (CDL) and non-CDL. CDL vehicles require specific licenses to operate. A vehicle requires a CDL to operate if it:

  • Has a Gross Vehicle Weight Rating (GVWR) of at least 26,001 pounds.
  • Has a GVWR of 26,001 or more when combined with the weight of something it is towing, as long as the towed part is at least 10,001 pounds.
  • Is designed to carry at least 16 people, including the driver.
  • Is used to transport large quantities of hazardous materials.

Such vehicles require a CDL to operate whether the business engages in interstate commerce or stays within state lines. Some states require drivers to have CDLs for additional vehicles. Non-CDL CMVs are commercial vehicles that are used for business, but do not require a CDL to operate.

Common CMV Guidelines

All CMVs are required to meet specific “hours of service” regulations. Depending on the type of vehicle, how it is used and the state in which it is used, CMVs only can be in service for a specified number of hours before they must be retired. These regulations are part of an effort to ensure safety on the roads, but many exceptions exist to these rules.

Many CMV drivers are required to keep log books of their on-duty and off-duty hours. The goal of these regulations is to ensure that commercial drivers are not too tired to drive when they are on duty, which would put everyone on the road at risk.

Federal and state laws also require CMVs to carry commercial insurance when they are part of a commercial fleet. Each vehicle in the fleet should have proof of insurance at all times. Finally, CMVs must have safety equipment on board, including fire extinguishers, warning devices and spare fuses.

Commercial Vehicle Definition for Trucking Lawsuits

When commercial vehicles cause accidents and harm other people, lawsuits sometimes ensue. Depending on the type of accident involved and the nature of the lawsuit, an attorney may recommend filing as a trucking lawsuit.

When many people think of trucking accident lawsuits, they consider those involving 18-wheelers and similar large trucks. However, other vehicles may qualify for trucking accident lawsuits as well. Any vehicle that meets the definition for a CDL CMV may be considered a commercial truck for these lawsuits.

Furthermore, if the lawsuit involves certain types of compensation, vehicles qualify as CMV if they are designed to carry eight passengers instead of 16. States may also set their own regulations as to what they consider a commercial vehicle in lawsuits. Anyone involved in a lawsuit that involves a trucking accident probably should consult a lawyer who is well-versed in these regulations.