Skip to main content

What Is the Difference between Commercial and Personal Auto Insurance

Are you an entrepreneur or a business owner wondering why personal auto insurance is different from the commercial auto insurance? Well, you are not the only one because most individuals and companies usually confuse the two more often than you think.

Typically, it is very tough for businesses to draw a line between the classification of their personal automobiles and commercial vehicles and fleet. Mostly small business owners, self-employed entrepreneurs, and their employees use personal vehicles to commute to work.

In many cases, they even use their own cars and vans to travel for job purposes, deliver goods, and transport equipment. To start with, in this case, personal auto insurance is not applicable as it prohibits using your personal vehicle for business use.

This also means that you will not be able to make any claims on your private vehicle if you were using it to carry out any work-related duties. Except for that, you were traveling to work and purely used the personal vehicle as a means to commute.

That said, let us dive a little deeper into the topic and find out what personal and commercial auto insurance policies cover.

What is Personal Auto Insurance

A personal auto insurance policy only covers you and your vehicle against accidents when you are using it for a personal reason. This may include going to work, traveling, non-work-related issues, etc. Moreover, this auto insurance policy also offers protection to you one or two of your immediate family members as well.

The first and undeniable rule of a personal auto insurance policy is that it will never cover any vehicle used for business purposes. Most auto insurance will ask you if you are going to use your car for commercial use. In case you say yes, the insurance company will offer you to take out commercial insurance instead.

It is best to be honest because if the insurer finds out that you are using the insured vehicle for business purposes, they will cancel your policy. In case of making a claim, the insurer will deny your claim request.

Personal auto insurance is also less expensive compared to its counterpart. This is because this insurance policy has less liability to cover. In some cases, personal auto insurance may accommodate using your vehicle for specific commercial use. However, you must confirm with the insurance company if they have such provisions to offer.

What Is a Commercial Auto Insurance

A commercial auto insurance policy covers your vehicles, employees, and sometimes passengers while using the vehicle for business use. One of the major factors that set commercial auto insurance apart from personal insurance is the vehicle’s ownership.

If the company owns the vehicle, you must get commercial auto insurance instead of personal auto insurance. This type of coverage is liable to pay for any legal costs and medical expenses of the parties involved in an accident.

A commercial auto insurance policy typically provides coverage to all your employees. This is known as “additional insured’ meaning any employee with a valid driver’s license for the category of the vehicle can use your commercial vehicles.

Most claims pertaining to commercial auto insurances are high limits. However, this depends on the type and size of the insured vehicles and the complexities of legal matters.

Are you a business owner who also owns the vehicle used for commercial purposes? In that case, you must buy commercial auto insurance. Moreover, it will provide you the coverage for the following.

  • Driving your employees and clients
  • Transportation and delivery of goods and equipment
  • Using a vehicle for commercial purposes while charging the passengers for giving them a ride
  • Carry heavy-duty workload
  • When you charge other businesses to transport their equipment.

If you and your workers use personal vehicles to carry out work duties, you must purchase a non-owned and hired auto insurance policy. It is the type of commercial policy that offers liability coverage against accidents while driving a personal vehicle for commercial use.

This version of commercial auto insurance also offers you protection when your business leases or rents a vehicle. However, it is imperative for you to remember that this type of auto insurance coverage will only cover your legal bills and not the damages to the vehicle during an accident.

You can also use non-owned and hired commercial auto insurance to cover yourself when you lease or rent a car or van for a business trip.

A Quick Tip

The first thing you must do when buying personal or commercial auto insurance is to conduct some research. Gather as many quotes from multiple auto insurance companies. The next step would be comparing them to choose the one that offers you the most features with the highest coverage limits within your budget.

Buy From the Best

You can now purchase both personal auto insurance and commercial auto insurance with convenience at Velox Insurance. Not only that, you will be able to secure a competitive quote online within minutes and even buy online or via one of their representatives over the phone.

Ready to Get a Quick Quote?