As a Michigan personal injury lawyer, I get these calls more often than you would think. A parent calls in upset because their kid was in a crash while delivering pizzas. No injuries, just property damage. Then the real shock hits: the auto insurance company says they are not paying because the car was being used for commercial purposes.
Unfortunately, in Michigan, that denial is often completely legal.
What Is the Commercial Use Exclusion in Michigan Auto Insurance?
Most personal auto insurance policies in Michigan exclude coverage when a vehicle is being used for commercial or business purposes. That means if the car is being used to make money at the time of the crash, the insurer can deny the claim.
From the insurance company’s perspective, delivering food or people increases risk, and that risk was not priced into a standard personal policy.
Common Commercial Uses People Do Not Realize Are Excluded
This is where people get burned. Many drivers have no idea their everyday side hustle can void coverage.
Some very common examples include:
- Pizza or restaurant delivery
- Uber or Lyft
- Uber Eats, DoorDash, or Grubhub
- Shipt or Instacart
- Amazon Flex or other package delivery gigs
- Running errands or deliveries for a small business
- Transporting tools or equipment for paid work
Even if the job is part time, occasional, or just a side hustle, it can still trigger the exclusion.
Why Michigan Insurance Companies Can Deny These Claims
Michigan law allows insurers to limit coverage based on how the vehicle is used. If the policy clearly excludes commercial use and the vehicle was being used to earn money at the time of the crash, the insurer can deny property damage coverage and sometimes other coverages as well.
This often comes as a shock because the driver may have paid premiums for years and never had a claim before.
Here Is the Worst Part: Even If the Crash Was Not Your Fault
This is the part that really surprises people, and honestly it feels unfair when you first hear it.
In Michigan, if you are driving uninsured, you are generally barred from recovering damages from the at-fault driver. That includes pain and suffering and, in many cases, even vehicle damage beyond very limited exceptions.
Here is why this matters in the commercial use situation.
If your insurance company denies coverage because you were using the vehicle for commercial purposes, Michigan law treats that as driving uninsured at the time of the crash. Even if the other driver clearly caused the accident, you may be completely precluded from recovering damages from them.
So imagine this scenario. Your child is delivering pizzas. Another driver runs a red light and causes the crash. No dispute about fault. But because the insurance carrier denies coverage due to commercial use, your child is considered uninsured under Michigan law and cannot recover damages from the at-fault driver.
That is not a loophole. That is how the law works.
This is why the commercial use exclusion is so dangerous. It is not just about your own insurance refusing to pay. It can wipe out your ability to recover anything at all, even when someone else caused the crash.
If this happens to you, it is important to call an experienced Michigan Personal Injury Attorney to determine what your options are.
What You Should Do If You Drive for Work
If you or your child use a personal vehicle for any kind of paid driving, you should talk to your insurance agent before there is a problem.
Ask specifically about:
- A rideshare endorsement
- A delivery driver rider
- A commercial auto policy if driving is frequent
These add-ons usually cost far less than people expect and can save you from thousands of dollars in uncovered damage.
The Bottom Line for Michigan Drivers
If you are using your car to make money, even occasionally, do not assume your regular Michigan auto insurance will cover you. In many cases, it will not, and the denial may be completely lawful.
It is far better to fix the coverage issue now than to learn about the commercial use exclusion after an accident has already happened.
If you have questions about a denied claim or want to understand how Michigan insurance laws apply to your situation, talking to a lawyer early can help you avoid making an already bad situation worse.
Disclaimer: This article is for general informational purposes only and is not legal advice. Every insurance policy and accident scenario is different, and the application of Michigan law can vary based on specific facts. Reading this article does not create an attorney-client relationship. If you have questions about your auto insurance coverage or a denied claim, you should consult with a qualified Michigan attorney regarding your specific situation.