All the Ways Business Auto Insurance is Different from Regular Car Insurance

There’s a thin line between commercial and personal auto insurance. In fact, sometimes it can be challenging to decide which type of car insurance policy is right for your vehicle. While both policies will cover costs related to property damage and medical expenses after an accident, regular car insurance will not cover business driving. You can, therefore, opt for this option if you don’t need a vehicle in your everyday business operations.

Read along to see the differences between personal car insurance differs from business auto insurance.

Let’s get started:

Commercial Auto Insurance vs. Regular Car Insurance

The kind of insurance you will need for your vehicle is based on the reason for your driving. To that end, you may want to buy a personal auto policy if you don’t require a vehicle for your day-to-day business activities. if, on the other hand, you own a business vehicle, the commercial auto policy would be ideal for you.

You might have sufficient liability coverage if you drive your personal vehicle to and from work. But considering the risk involved in work-related driving, you may require business auto insurance. This policy offers coverage to higher claims, different types of vehicles, and can cover more complex legal matters compared to personal auto insurance.

How to Determine the Difference Between Personal and Business Auto Insurance

You can know the difference between personal and commercial car insurance by examining the reason for your driving. The liabilities you’ll face while on the road will largely depend on the reason for your driving. Due to the risks involved in a business driving, the personal auto policy does not offer sufficient coverage.

Below are some factors that will help determine the type of car insurance right for you:

Vehicle Ownership

You’ll need commercial auto insurance if your business owns the vehicle.

The Size and Type of Vehicle

The type and weight of the vehicle will determine the extent of the damage after an accident. To that end, you might require extra coverage if you own heavy-duty vehicles.  

Vehicle Usage

Any vehicle used for business-related functions will require commercial auto insurance. However, a personal auto policy may be sufficient for vehicles meant for commuting.

Who Should Buy Personal Auto Insurance

The law requires you to carry personal auto policy to be on the road. Depending on your state, you’ll be required to have coverage that can, at the least, cover costs due to third-party damages or injuries. Below are some instances when you’ll need personal car insurance:

  • When communicating to and from work
  • When taking a road trip during the weekend
  • When running personal errands
  • You don’t use your vehicle for work-related driving

You’ll require a separate commercial auto policy if you use your vehicle for business. You can also opt to add an endorsement to cover work-related driving if you use your vehicle for business occasionally.

When You Need to Acquire Commercial Auto Policy

You’ll need commercial auto coverage for any business-related driving. You’ll need this policy for all vehicles owned by your business and also for rented vehicles.

Instances where businesses will need commercial auto insurance include:

  • You’re using your vehicle to pick and deliver goods
  • You’re driving people
  • You’ve installed equipment for instance toolboxes on your vehicle for business purposes
  • When it’s a law requirement

Cost

You can’t ignore cost when comparing personal auto insurance and commercial auto insurance. While the cost of your insurance policy will depend on many factors, business auto insurance is always costlier than personal auto insurance. Be sure to get a quote from your insurer to see how the two options compare.

Below are some factors that will impact both the personal and commercial insurance costs:

  • Vehicle usage
  • Vehicle value
  • Policy and coverage limits
  • Vehicle features and modifications

Liability Limits

When it comes to liability coverage, there’s no huge difference between personal and business auto insurance.

As said earlier, a commercial auto policy provides the same coverage as a personal insurance policy but at a higher limit. Commercial auto policy will, therefore, comes in handy if you need a higher liability limit for your business.

Business vehicles are known to drive more often and further when transporting goods. These, and other factors, increases the likelihood of risks occurring. Though at a higher premium, commercial auto insurance will cover these risks.

If you’re still unsure which type of car insurance you need for your vehicle, you can talk to your insurance agent or broker who will help get answers to any questions you might have regarding these two policies.

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