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When do I Need Personal Auto vs. Commercial Auto Insurance?

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By Next Insurance Staff
Jun 11, 2020 min read

Finding the right auto insurance for your business can feel like you’re trying to solve some great mystery. You spend weeks sleuthing around the internet or neck deep in a pile of documents, trying to decipher the difference between personal and commercial auto insurance

As cinematic as that sounds, it’s actually pretty simple. We’ll break it down for you.  

What is personal car insurance?

Personal car insurance covers accidents that happen while you’re driving your car for (surprise) personal reasons. 

Here are a few examples of what your personal car insurance covers: 

  • Commuting to work
  • Skipping over to the store for an apple — but let’s be honest, a doughnut 
  • You and your team carpool to a bar after work. Congrats! You’re the designated driver.
  • Any travel unrelated to your job

What is commercial auto insurance?

If you own a vehicle used primarily for business, you may need a commercial auto insurance policy. It can cover vehicles used to:

  • You frequently drive to work sites.  
  • Your farm-to-table delivery business literally requires that you drive to farms.
  • You’re a traveling pet groomer, and you take your shears skills on the road.
  • You’re a landscaper and you rely on your pick-up truck to move that heavy lawnmower.

Do I need commercial auto insurance?

Most states require commercial auto insurance for business-owned vehicles. Also, most personal auto policies provide limited or no liability coverage for business use. 

For instance, if you use your car primarily to shuttle groceries from the store to your fridge and only occasionally for your business, you may not need commercial auto insurance. Options like a personal auto policy with limited business coverage or a hired and non-owned auto insurance policy may be right for you. 

If you’re doing any additional business driving with your personal vehicle, you’ll want to look closely at your personal auto policy documents to make sure you are covered.

The difference between personal and commercial auto insurance

Personal auto insurance typically covers the owner of the vehicle and perhaps their immediate family members. But if a friend borrows your car to pickup doughnuts, they most likely won’t be covered if an accident occurs.

Similarly, if an employee uses your business vehicle to go for coffee run, they wouldn’t be covered under a personal auto policy if they got into a fender bender on the way back. The spilled tray of double iced caramel macchiatos would not be covered. Tragic.

Commercial auto insurance covers you, your employees, and occupants of your business-owned vehicles.

What’s covered with commercial auto insurance?

  • Injury to you or an employee
  • Injury to someone who is not in your vehicle
  • Property damage
  • Repairs and replacements after an accident
  • Comprehensive coverage, including theft, vandalism, or weather-related damage

The cost of commercial auto vs. personal auto insurance 

Commercial auto insurance policies offer broader coverage and higher liability limits. That’s code for: it costs more.

Since you are essentially paying for more insurance to protect you and your business from accidents, commercial auto insurance is usually more expensive than personal auto insurance.

Many factors go into the pricing of your commercial auto policy. Every business is unique and should have a tailored policy to reflect that.

If your floral arrangement business has more vehicles than your competitors (and let’s be honest, more tasteful bouquets), it doesn’t make sense for you both to have the same policy.

We need more information about your (clearly superior) business before we can provide a quote. Some of those details include:

  • How many vehicles you are insuring 
  • The types of vehicles you are using
  • Who will be driving them 
  • What you use your vehicles for

To keep things affordable, we offer several payment options to fit your budget. We also offer  customizable policies that cut out the coverage that you don’t need. 

Start an instant quote online today.

How Next Insurance protects small businesses

Next Insurance utilizes AI and machine-learning technology backed by licensed insurance advisors to deliver customized insurance options for small business owners and self-employed professionals. 

Answer a few basic questions about your business to get a commercial auto insurance quote in less than 10 minutes. If you purchase a policy, you’ll have instant access to your certificate of insurance. We also offer general liability, professional liability, and workers’ compensation coverage. 
Learn more about your business insurance options.

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By Next Insurance Staff
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