Car Insurance for Rental vs. Private Business Use: How to Choose the Right Coverage

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One of the most damaging misconceptions in car ownership is believing that "Type 1 insurance covers everything." In reality, a critical condition specified in every policy is the "Usage Code." If a vehicle is used for a purpose other than what is stated in the policy, the insurance company has the legal right to deny coverage immediately after an accident.

This article clarifies the difference between "private cars used for work" and "rental or commercial vehicles" to help you choose the correct insurance and avoid paying for a policy that won't protect you.

1. Private Car Insurance (Personal Use): What does it cover?

Generally, voluntary car insurance (Type 1, 2+, 3+) specifies Usage Code 110 (Private Passenger Car).

• Covers: Commuting to the office, driving to meet clients (sales), or personal travel.
• Does NOT Cover: Using the car for "hire" or "rental" purposes.

Critical Warning: If you use a private car to drive for Grab, Bolt, or other ride-hailing apps while holding a standard Code 110 policy, voluntary insurance will likely deny coverage if an accident occurs while carrying a passenger. This is considered using the vehicle for commercial use or public transport, which violates the standard terms.

2. Commercial and Rental Vehicle Insurance

For those running a car rental business or using a vehicle for transport/logistics, the policy must specify Usage Code 320 (Commercial Use/For Hire) or a similar code depending on the vehicle type.

For Car Rental Businesses:

Business owners must purchase specific "Rental Car Insurance." Premiums for this category are typically 2-3 times higher than standard private insurance. This price reflects the higher risk involved, as drivers change frequently and may not be familiar with the vehicle.

• Benefit: It covers damages to the vehicle and third-party liability even when the driver is a renter (not the named owner).

For Ride-Hailing (App-based Drivers):

Many insurers now offer specific "Public Transport via Application" insurance or add-on packages to standard policies. These are designed to close the coverage gap for drivers who use their private cars to generate income.

How to Check Your Policy

Look at your current insurance policy schedule (the main document page) under the section "Usage Code".

• Code 110: Strictly for private use.
• Code 320 or 210 (for commercial pickups): Valid for commercial or business use.

Conclusion

Choosing the wrong insurance type might save money on premiums initially, but the financial consequences of a denied claim can be devastating. If your vehicle is used to generate revenue (whether through ride-hailing or renting it out), you must inform the insurance company and switch to the correct commercial policy to ensure your asset is genuinely protected.

References:

• Office of Insurance Commission (OIC): Motor Insurance Policy Interpretation Manual (www.oic.or.th)
• Thai General Insurance Association (TGIA): Vehicle Usage Code Classifications

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