What you should know about personal and commercial auto insurance.
For small businesses, the line between what is considered a personal vehicle and a commercial vehicle is often blurry. When a small business uses a vehicle to transport employees, move equipment, or deliver goods, it’s common to assume that a personal auto insurance policy will cover such activity. However, this is simply not the case.
Personal vs Commercial Auto Insurance
The main difference between personal and commercial car insurance is the type of liabilities the policy covers. While both policies pay for vehicle repairs and medical bills after an accident, a commercial policy typically covers higher claims, different types of vehicles, and more complex legal issues than a personal policy.
Commercial Auto Insurance
This covers accidents that occur while you or your employees are using a vehicle for business purposes, including transporting goods, materials, employees or clients. A commercial policy typically insures all the business’s employees as additional insured parties, which means that every employee with a valid license can use the vehicle.
If you regularly transport goods, drive employees/clients, charge passengers for a ride, haul work-related loads, or tow a trailer used for business, it’s important that you secure a commercial auto insurance policy.
Personal Auto Insurance
A personal policy only covers accidents that occur while you’re using the vehicle for personal reasons, including commuting to and from work and driving for pleasure. If you use your vehicle for business reasons, other than commuting, you may need to obtain a commercial auto insurance policy.
Business use of a personal vehicle insurance is typically less expensive than a commercial auto policy. These are designed for people who use their vehicle to work for a ridesharing service or do seasonal or part-time work.