What is the difference between commercial and personal car coverage?
Since personal car insurance and commercial car insurance have different risks, the policies are written differently. Car insurance is important for both individuals and for businesses.
Since the insurance company is taking on the liability and risk when you purchase a policy from them, the amount of that risk and liability is dependent upon many factors.
Read on the learn all about the differences between commercial auto insurance and personal auto insurance and then enter your zip above to start comparing FREE car insurance quotes!
Personal Car Insurance Policies
Personal car insurance policies are specifically written for individuals and families. Personal car insurance is required by most states (except New Hampshire) in order to legally drive a vehicle. There are many factors that determine the terms and rates of a personal car insurance policy.
The factors that affect personal car insurance rates can be both negative and positive. Positive factors will decrease the monthly premium rates while negative factors will increase monthly premium rates.
Some of these factors the driver can control while other factors cannot be controlled. Once you are aware of the negative and positive factors, you can do your best to change them to work in your favor.
Examples of positive factors include a clean driving record, being over 25, being married, living in a low crime area, and having anti-theft devices on your vehicle.
Some examples of negative factors are a poor driving record, being under the 25, being male, being single, living in a high crime area, and having a previous policy that was canceled due to non-payment.
Personal car insurance policies include both collision and comprehensive options. A collision only policy will only cover a collision between your vehicle and another car or object.
A comprehensive plan will cover collisions as well as other means of damage to your vehicle such as theft, vandalism, and natural disasters.
A personal car insurance policy will not cover you if you are driving a company vehicle for your job. This requires a commercial car insurance policy carried by the company you work for.
Commercial car insurance policies are much different than personal car insurance policies for many reasons.
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Commercial Car Insurance Policies
A commercial car insurance policy is needed for any company that has commercial trucks or business vehicles. A commercial car insurance policy is in the company’s name and can specify which employees are covered when driving the vehicle or give blanket coverage for all employees.
If an employee is in an accident in a company vehicle, but does not have insurance, the company will have to pay out of pocket. This also opens the door for both the company and driver to be sued if they were at fault.
The two main types of commercial car insurance are liability insurance and physical damage coverage. If you cause an accident and damage another vehicle, cause bodily harm to another person, liability insurance will cover the damages.
Physical damage coverage will cover collision and theft of a company vehicle when driven for company purposes.
In addition to these two types of insurance, there is also the option to add uninsured motorist coverage, medical payments, roadside assistance, and other types of coverage.
Just as with personal car insurance, commercial car insurance rates can increase or decrease due to negative and positive factors. For example, the more established a business is, the lower monthly premium rates will be.
The more claims that have been filed due to accidents or other damages, the more the monthly premium rates will be. Companies can lower their rates by hiring responsible drivers and training them appropriately.
Comparing Car Insurance Quotes
To find either a personal or commercial car insurance policy to fit your budget, you can compare rates and quotes using an online comparison tool. An online comparison tool allows you to see what several top rated companies have to offer.
Whether you are looking for a car insurance policy for yourself or your business, online comparison tools are a great way to save time and money. Enter your zip code below and start comparing affordable car insurance quotes today!
The Thin Line Between Personal and Commercial Auto Insurance
If you don’t operate a fleet of business vehicles — or run a business at all — you may never have given commercial auto insurance a thought. But it’s possible you may need a commercial policy even if you don’t fall into these categories, particularly if you use your own vehicle for work purposes other than commuting.
To help you avoid confusion, we’ll explain when shopping for commercial auto coverage makes more sense than getting personal car insurance quotes.
Who needs commercial auto insurance
These examples show how fine the line between needing personal and commercial auto coverage can be, and can help you see which side you’ll likely fall on.
The trouble with transporting stuff
Personal car insurance typically won’t pay to repair damage or treat injuries you sustain while you’re transporting people or goods for money, in large part because the liability and property damage risks are too great. Driving friends to a concert or grabbing food for co-workers back at the office is covered. But if you use your vehicle, say, to deliver pizzas, you need commercial auto insurance.
Rideshare drivers — such as Uber drivers — are a unique case, and a growing number of insurers offer ridesharing insurance. These policies are often cheaper than commercial car insurance.
It’s not where you drive, but why
There’s no limit to how much you can drive under a standard auto policy, as long as it’s for personal reasons.
But if, for example, you’re a sales manager and regularly use your car to visit stores within your region, or you’re an account representative and frequently drive far and wide to meet — and possibly transport — clients, you probably need commercial coverage to account for the high liability risk your company could face in the event of an accident.
Watch what you’re hauling
Commuting to a job is one thing. Bringing along heavy tools or equipment is another. For instance, a construction worker hauling a trailer, ladder rack, expensive drills and other supplies faces a higher chance for property damage and theft than your average commuter — and might need commercial car insurance as a result.
Talk to your insurer about modifying your policy
Deciding between personal and commercial auto insurance involves many mitigating factors and questions, so you should discuss the issue with your insurance agent or insurer.
You likely need a separate commercial policy if you use your car primarily or frequently for business. But if you only occasionally use it for business purposes, your insurer might be able to modify your personal auto policy, for an added cost, so that it includes your work-based driving.
Most well-known insurers offer commercial auto insurance. Because it’s typically more expensive than personal auto coverage, getting several quotes is the best way to find affordable rates.
Who Needs Commercial Auto Insurance
Commercial auto insurance is insurance designed for vehicles used for business purposes.
Depending on your employer and/or your own business, you might need higher liability insurance, as well as additional coverage add-ons to make sure you, your employees, other individuals, your vehicle, and your business are fully protected.
Commercial Auto Insurance vs. Personal Car Insurance
When it comes to drivers, vehicles, and purposes, personal drivers don’t have the same kinds of car insurance concerns as do businesses.
Businesses have much higher liability issues; as such, usually they have higher liability insurance requirements or recommendations. Generally, businesses deal with:
- Work gear.
- Other people and/or equipment.
Commercial car insurance is typically required to sufficiently cover the above.
Drivers Who Need Commercial Auto Insurance
You need commercial auto insurance if you use your vehicle for work or own vehicles operated by a business.
Commercial car insurance coverage isn’t just about big rigs.
Commercial vehicles actually can include what you might consider “regular vehicles,” such as:
- Pickup trucks.
- Sports utility vehicles.
It also branches out to some of the vehicles you might more closely associate with commercial work, such as individual or fleets of:
- Trucks including, but not limited to, dump trucks, box trucks, refrigerator trucks, bucket trucks, and catering trucks.
- Vehicles outfitted with work equipment.
- Utility vans.
- Limousines, taxicabs, and other livery vehicles.
- Rented or leased vehicles.
- Any vehicle owned or leased by a business, partnership, or other corporation.
Simply put, if you use a vehicle or vehicles for your profession or business (other than commuting to work), it’s likely you need commercial auto insurance.
NOTE: If you use your vehicle for work-related purposes and you aren’t sure if you need commercial auto insurance, ask your insurance agent.
What Does Commercial Auto Insurance Cover?
Basically, commercial car insurance covers the same major coverages private individuals purchase (usually at higher limits); however, there are many add-ons more suited for commercial driving, such as coverage for your:
- Employees, including fellow employee coverage and broadened and blanket policies that protect additional employees or people for whom your business is doing work.
- Equipment, including loading and unloading goods.
- Business, which protects your assets in the event of a lawsuit.
Your auto insurance specialist can inform you of your exact coverage needs based on your business and vehicle use.
How Much Commercial Auto Coverage Do You Need?
Generally, you must meet your state’s liability insurance requirements (which include bodily and property damage coverage). Understand that these coverage limits might be higher than they are for regular passenger vehicles.
If you don’t own your commercial vehicle(s) outright, your financial institution also might require comprehensive and collision coverage (which will pay for damages to your vehicle when you are at fault in an accident or the victim of non-collision events such as weather or fire).*
Aside from those coverages, you might consider additional types of auto insurance including, but not limited to:
- Uninsured/underinsured motorist insurance: This insurance protects you if you’re involved in an accident with another driver who has no insurance or not enough insurance.
- PIP and medical payments coverages: Personal injury protection (PIP) and medical payments coverages help take care of expenses incurred when you and/or your passengers are injured in an accident.
- PIP covers more than medical payments, such as wage loss.
- Emergency roadside insurance: Emergency roadside insurance helps you in the event you’re left stranded on the side of the road.
- It can include:
- Battery services.
- Towing expenses.
- Tire changes.
- Fuel delivery.
- Locksmith services.
- It can include:
- Personal effects insurance. Some insurance companies provide personal effects coverage that takes care of your or your employees’ personal belongings in the event of theft. Usually, this coverage is up to a certain dollar amount.
These are just a few suggestions. Your auto insurance provider will explain the appropriate coverages and whether they’re required or available in your state.
How to Purchase Commercial Auto Insurance
Basically, you’ll purchase commercial car insurance coverage the same way you’d purchase regular vehicle insurance:
- Decide whether you’ll work alone, with an agent, or with a broker.
- Generally, insurance agents focus on one insurance company, while brokers can research several different providers for you but may charge a broker fee.
- Compare several auto insurance providers. Look at factors such as their financial standings and customer service feedback.
- Never look at just one provider; always compare at least three quotes.
- Discuss coverage requirements (liability insurance) and optional coverages.
- Choose the provider that offers the best coverage for you at the most affordable rate.
- Purchase your commercial auto insurance plan.
Shopping online for commercial auto insurance can ease the process and make your purchasing experience quicker.
Commercial Vehicle Insurance FAQ
Learn Commercial Vehicle Insurance 101
What is Commercial Auto Insurance?
Commercial auto insurance provides protection for any vehicle designated for business use against both property damage and liability. Whether you drive a vehicle that is for dedicated business use or drive a personal vehicle for business, it is important to have commercial auto insurance, as your vehicle will not covered under a personal auto policy.
An independent agent in the Trusted Choice network in your area can help you get the business vehicle insurance you need to protect your company assets. Contact a local member agent in your area today.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance covers a variety of situations. Options and terms vary from one insurance company to another, so be sure you fully understand what is included in the policy. If you work with an independent agent in the Trusted Choice network, you can work with your agent to create a completely customized policy that matches your business needs, complete with all available discounts.
Several types of coverage may be included in your commercial auto policy; others are options that you can purchase separately. You will also need to choose the coverage amounts (“limits”) and deductibles. Typical coverage available includes:
- Property damage liability
- Liability for bodily injury to others
- Optional bodily injury coverage for injuries that occur outside of the state in which you reside
- Personal injury to you, your employed drivers or passengers including medical expenses and lost wages
- Collision coverage for costs associated with an accident, regardless of who is at fault
- Comprehensive coverage for damage other than collision
- Medical payments coverage for the cost of hospitalization, treatment and funeral expenses
- Uninsured and underinsured motorist coverage
- Non-owned auto coverage for when you or your employees drive a rented or borrowed vehicle
- Loading and unloading liability
- Substitution transportation when your commercial vehicle is being repaired and you use a loaner from the repair shop
- Towing and labor costs
How Does Commercial Auto Insurance Work?
Commercial auto insurance works by providing insurance coverage or any vehicle that your use for business purposes, and for your commercial drivers. As a business owner, you can get commercial vehicle coverage for a single vehicle or a fleet of vehicles. A commercial auto policy can include several different types of optional coverage, allowing you to adjust the policy coverage to your particular business circumstances and the use of your vehicles.
In the event of an incident, such as damage to one of your commercial vehicles from weather, an accident or other incident, you can file a claim and receive compensation that will help to cover the cost of repairs. If you or one of your drivers is at fault in an accident that injures another person or damages their property, that person can file a claim with your insurance company. In this case, your commercial vehicle liability insurance will cover the costs of the claim, up to the limit of your policy.
Many business owners choose to buy a commercial umbrella policy to cover the costs of large liability claims that exceed the limits of the vehicle liability policy. This strategy can provide much higher limits, in $1 million dollar increments, to cover the costs of liability claims and law suits and protect the business financially.
When Do I Need Commercial Auto Insurance?
You need commercial auto insurance for any vehicle that your company uses for business purposes, any vehicle that has a commercial license plate or tag and any vehicle that is registered as a commercial auto.
You must also get commercial auto coverage if your employees will be driving or using vehicles in the course of doing business, whether making deliveries, driving people to the airport or running errands on behalf of the business.
If you use your vehicle for any of the following functions, you may also be required to get commercial coverage:
- Using the vehicle to carry equipment
- Transporting flammable or hazardous material
- Transporting housekeeping equipment for business use
- Using, carrying or transporting cranes, or a winch or plow
- Hiring your vehicle out to tow other vehicles
- Delivering any goods such as pizza or any form of wholesale or retail products
- Delivering newspapers
- Trucking and freight transportation
- Transporting people as a chauffeur, limousine service or taxi service
Some situations and certain occupations may be covered under standard auto policies, but you should always ask your insurance agent if your vehicle use warrants a commercial policy.
Why Do I Need Commercial Auto Insurance?
You need commercial auto insurance for any automobile, taxi, van, limo, bus or small truck that you use for business because a personal auto policy will not cover your vehicles used for business.
Your commercial vehicle coverage will protect you and your business from the costs of property damage, injury and liability claims that you may incur in the use of your commercial vehicles.
For larger commercial vehicles such as tow trucks, cement trucks, construction vehicles, tractor trailers or semi-trucks, you will need a commercial truck insurance policy. Not only is your commercial vehicle policy critical for protecting your business financially, but it is required by law.
Where Can I Get Commercial Auto Insurance?
There are several ways to get commercial auto insurance policies, such as shopping for quotes online, but you may not necessarily find the best coverage or rates through the Internet. You also may not have the reassurance that your coverage matches your real needs.
One of the best ways to get commercial auto insurance is through an independent agent in the Trusted Choice network. Here are some advantages to working with an independent agent:
- Independent Trusted Choice member agents work with multiple insurance companies, and can shop for the best rates for you.
- Your agent is local, available to meet in person, and can answer all of your questions so that you can make an informed decision about your coverage.
- Your agent will get to know you, your business, and your vehicle use, and will be able to help ensure that your coverage is the right type and amount to protect you and your company in the event of an accident.
- Your independent agent can meet all of your commercial insurance needs, and can package up the different policies you may need so that you get all of your coverage from of one office.
How Much Does Commercial Auto Insurance Cost?
The cost of auto insurance depends on a number of things including the size of your business, the types of vehicles and number of vehicles you need to insure, your risks, and the amount of coverage you need.
Generally, a passenger auto vehicle will cost much less than a heavy duty vehicle such as dump truck. However, insurance carriers also offer fleet insurance and these policies are typically available at a bulk discount
The cost of insurance also depends on the driving records of the drivers who will be using your commercial vehicles. Employees who have bad driving records will cost you more to insure, so it is always important to perform a driving record background check on prospective employees. Drivers who are between the ages of 30 and 65 are typically given better insurance rates.
In terms of the cost for the type of vehicle being insured, rates are generally the least expensive for vehicles used in construction and farming. Vehicles used as passenger vehicles and for small deliveries are slightly more expensive. The most expensive vehicles to insure include heavy duty cargo vehicles that transport loads more than 10,000 pounds.
Is Commercial Auto Insurance Tax Deductible?
Yes, your commercial auto coverage is tax deductible. There are many situations that allow you to deduct the cost of commercial auto insurance for tax purposes when you use your vehicle for commercial or business use. If you are self-employed, you may be able to deduct your commercial auto insurance premium under Schedule C; if you are an employee and do not receive mileage or expense reimbursement, you can use Form 2106 (Employee Business Expenses). Your best bet is to contact the IRS or a tax advisor for clarification.
Does Commercial Auto Insurance Cover Personal Use?
Personal use will be covered for a company owned vehicle providing the company has commercial auto coverage. If you are driving your own vehicle to and from work without using your vehicle for commercial purposes then it would be covered under your personal auto policy.
If you are using your personal vehicle for occasionally for commercial purposes, you will either need to have sufficient liability coverage under your personal auto policy, or purchase commercial auto insurance. The best option will depend on the circumstances; if you are using your vehicle for any kind of business purpose, be sure to talk with your agent. The business may be required to get a non-owned business liability endorsement for these situations.
If your personal vehicle is insured as a commercial vehicle and other members of your family use the vehicle for personal purposes, then you may have to get a “non-owned vehicle” endorsement. Ask your agent about what is required for these situations.
Do I Need Commercial Auto Insurance to Deliver Pizza?
If you use your own vehicle to deliver pizza, there are several options you can consider:
- Buy a commercial lines policy.
- Get non-owner coverage from the pizza business owner. This will give you liability coverage for injuries and property damage to others, but will not cover property damage to your own vehicle.
- Obtain coverage from insurance companies that offer policies specifically tailored for personal vehicles used for delivery situations. The insurance company may even discount the rates if you use the vehicle for seasonal use such as a summer job.
One of the best ways to find a commercial auto policy to suit your individual commercial vehicle insurance requirements is to speak with an independent agent in the Trusted Choice network who specializes in business insurance. An independent agent can compare policies and rates so you can find a policy you can afford.
If you use your vehicle for commercial purposes or plan to do so in the near future, contact an agent today to find the commercial vehicle coverage you need so that both you and your business are protected.