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When do I need personal auto vs. commercial auto insurance?

Kim Mercado image
By Kim Mercado
Jul 7, 2021 min read

Finding the right auto insurance coverage 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 auto vs. 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.
  • 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 for these purposes:

  • You frequently drive to job sites.
  • Your farm-to-table delivery business literally requires that you drive to farms.
  • You’re a traveling pet groomer, and you drive to meet your furry clients.
  • You’re a landscaper, and you rely on your pickup truck to move that heavy lawnmower.

Commercial auto insurance isn’t just for big rigs, box trucks and other typical commercial vehicles. Everyday cars and pickup trucks can also benefit from commercial auto coverage.

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 mostly use your car to go grocery shopping 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.

But what if I use my vehicle for both personal and business reasons? 

Few businesses are offering the perks of a dedicated company vehicle these days. The lines between home and work are a lot more blurred, too. 

If you have one car for all your transportation needs, you're exposed to different risks when you're driving for business versus personal purposes. So, if you're doing a lot of business driving with your personal vehicle, you'll want to look into commercial auto insurance.

If you have employees that operate your car, unlike a personal policy, a commercial auto insurance policy can also cover them up to the limits of the policy.

The difference between personal auto vs. commercial auto insurance

A personal auto insurance policy typically covers the owner of the vehicle and perhaps their immediate family members. If a friend borrows your car to pick up doughnuts, they most likely won’t be covered if an accident occurs.

Similarly, if an employee uses your vehicle to go for a coffee run, they wouldn't be covered under a personal auto policy if they got into a fender bender on the way back. 

Commercial auto insurance covers you, your employees, and the occupants of your vehicles.

What's covered with commercial auto insurance?

  • Injury to you or an employee (medical payments)
  • Injury to someone who is not in your vehicle
  • Property damage
  • Towing, repairs and replacements after an accident
  • Rental reimbursement
  • Underinsured motorists (when another driver’s coverage isn’t enough)
  • Comprehensive coverage, including theft, vandalism, or weather-related damage

The cost of personal auto vs. commercial auto insurance 

Commercial auto insurance policies offer broader coverage and higher liability limits, which often costs more than personal auto insurance.

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

If your floral arrangement business has more vehicles than your competitors, it doesn’t make sense for you both to have the same policy.

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

  • How many vehicles you are insuring 
  • The type of vehicle 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 commercial coverage that you don't need. 

Start an instant quote online today.

How NEXT Insurance protects small businesses

NEXT Insurance offers commercial auto insurance to protect your business from unexpected expenses related to your vehicle, whether it’s being used for work or personal purposes. Our customized insurance options are tailored 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 commercial auto options.

Kim Mercado image
By Kim Mercado
Kim Mercado is the managing editor of NEXT's small business blog.
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