Personal vs. Commercial Auto Insurance: Which One Do You Need?

Are you an entrepreneur or a new business owner? Do you use your vehicle for business and personal errands? Before you go anywhere, make sure you have the right insurance coverage! If you are new to using your vehicle for business, learning about how your commercial and personal auto insurance works can be quite confusing and overwhelming at first. Here are a few things you should know.

Auto Insurance That Protects Not Just Your Vehicle But Also Your Business

Both personal auto and commercial auto insurance provide the necessary coverage from unexpected accidents, but there are also differences between the two. Let’s take a closer look.

Both personal and commercial auto insurance can be customized to provide coverage against personal injury and other liabilities. You can purchase comprehensive coverage that will protect your vehicles’ damage caused by risks like fire, theft, floods, and other calamities.

On the other hand, commercial auto insurance typically protects you and your business and offers higher policy limits than personal auto insurance. If you’re using your vehicle for business, then better be prepared than end up frustrated if you have an accident while doing job errands.

Employee Coverage

If you have employees who drive your vehicles as part of their jobs, you should ensure that they are covered under your auto insurance policy’s terms. If they drive their own vehicle for business use, your commercial auto insurance can provide coverage that exceeds the limit of their personal auto insurance.

Specialized Coverages

Many commercial auto insurance policies provide specialized coverages at no extra cost. These policies include coverage for damage to rented or hired vehicles used for your business. It extends protection to lease or loan gaps, which occur when the cash value of a vehicle that you’ve leased or have been making payments on is less than the amount you owe to a rental company or a financial institution.

Still undecided if you should get commercial auto insurance or just stick with your personal auto insurance? Here are additional considerations:

Vehicle Ownership

If you are a sole proprietor and own the car, or an employee who owns the car and drives it mainly to the office, your personal auto insurance policy might be enough. If your vehicle is company-owned and you use it for business-related trips or complete job-related tasks, you most likely need a commercial auto insurance policy.

Vehicle Use

If you use your vehicle for multiple business trips to job sites, transporting tools, delivering your products and services, renting out your vehicle for transportation and freight services, and driving clients or employees, you might consider getting commercial auto insurance to protect your business assets. When you do, make sure that the coverage meets the regulations for the way you will be using the vehicle

Vehicle Type

The size and weight of your vehicle are major factors in determining the type of auto insurance you need. If you drive something much bigger and much heavier than an ordinary car or SUV, like a truck or commercial trailer, pick up van or utility vehicle exceeding a gross weight of 10,000 pounds, or vehicles that have special equipment installed that are used for business,

you probably need commercial auto insurance. Heavy-duty vehicles can cause more damage in an accident and need higher, more specialized coverage than a personal insurance policy can provide.

Higher Liability Limits

This differentiation is probably the most notable distinction between the two. Commercial auto insurance usually provides higher liability limits compared to personal auto insurance.

The Bottom Line

Because personal auto insurance offers less coverage, it is usually less expensive than commercial auto insurance. While both policies pay for property damage and medical bills, personal auto insurance usually rejects other claims if you get into an accident while driving your vehicle for business purposes. Hence, if you use your vehicle for business or have employees driving your vehicle, you require specialized commercial auto insurance coverage that protects higher claims, different vehicle types, and protection from more complicated legal issues. Having the right type of insurance coverage is an essential investment for any business owner using a vehicle for their business.

About Daniels Insurance, Inc.

At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.