Auto insurance is mandatory in most states, but having a commercial car is not the same as having a personal car. For this reason, the question of whether I need commercial auto insurance arises, and in these cases, we should always look for adequate coverage for our needs.
In the case of business vehicles, personal insurance policies will not work at all, so it will be essential to have a commercial policy. This is because the policies offer different coverages, and we must consider the type of policy we need in each case.
What is the difference between commercial and personal auto insurance?
For small businesses, it is sometimes difficult to differentiate the line between what is considered a personal vehicle and a work vehicle. However, most personal policies exclude business use, which means that we will not be covered if we have an accident while driving to work.
For this reason, it is important to be aware of both types of policies so that we can purchase the most appropriate one:
Commercial Auto Insurance
The main difference between personal and commercial policies is who owns the vehicle. We must contract commercial auto insurance if our vehicle is in our company’s name.
Both policies will pay for legal expenses, bodily injury, and property damage related to auto accidents. However, commercial auto policies typically cover larger amounts, different types of vehicles, and more complex legal processes.
This type of insurance will typically include all company employees, which means that any company employee with a driver’s license will be able to use the vehicle.
Coverages offered by business insurance
We will need commercial auto insurance if we own a vehicle primarily used for business. Among the coverages offered, we will find:
- Transportation of goods and equipment.
- Performing a service for which we have paid.
- Carrying passengers in the vehicle.
- Carrying people to transport goods in our vehicle.
- Transporting heavy loads related to work.
- Towing a trailer used for business.
Normally this type of insurance will cover employees who have our permission to drive the company vehicle. This policy will cover accident costs when an employee drives, even if the vehicle is used for personal purposes.
Hired and non-owned auto insurance
If we use a personal vehicle to do any work activities, it would be ideal to consider this type of insurance. This policy provides liability coverage if we get into an accident while driving our vehicle for work purposes.
It also provides protection when our company rents or leases a vehicle. However, this policy only covers legal bills resulting from an accident. It does not cover physical damage, so if the car is damaged in an accident, the insurance will not pay.
Personal auto insurance
These insurances will only cover accidents while using the vehicle for personal use. This will include commuting to and from work, or any non-work-related travel, being policies that insure the owner and one or two immediate family members.
These policies specifically exclude commercial use of our vehicle. If we have an accident while driving for work purposes, the insurance company will most likely deny our claim.
In some cases, these policies may include limited coverage for commercial use, so we should consult all policy terms with our insurance company.
How much does commercial auto insurance cost?
Commercial auto insurance costs more than personal auto insurance because the policies tend to have higher limits. This will mean that we will have more coverage in case of an accident than with a personal policy.
This insurance covers the entire business, including multiple drivers, vehicles, trucks, and even employees with bad driving records. However, these insurances do not have to be expensive, because it will depend on the particularities of our business.
Different factors can influence the cost of commercial auto insurance, such as:
- Risks of our industry.
- Type of vehicles.
- The number of cars.
- Frequency of driving.
- Employee driving records.
- Type of coverage chosen.
- Policy limits.
- Auto insurance claims history.
For this reason, we should always look for an insurance advisor who can give us complete advice on all matters related to this type of policy.
Thus, we will be able to contract the coverages that we need and adjust perfectly to the reality of our business.