Knowing when to insure a personal vehicle for commercial vehicle insurance. There will be times when just having commercial and or personal use insurance wont be enough and instances when you might need both. But what instances?
If you use a vehicle – such as a car or truck – for work purposes, then there’s a good chance you’ll need commercial auto insurance. On the other hand if like most drivers you also decide to use that same vehicle for personal purposes, should you consider that commercial vehicle for personal use insurance or vice versa?
Most commercial policies allow you to occasionally use a business vehicle for personal needs. Which raises the interesting question, will your commercial auto insurance cover you if there’s an accident on your own time?
The answer is not always. It all depends on the policy. Here’s a look at commercial auto insurance vs. personal insurance, and when you might need both.
What Is Commercial Auto Insurance?
Commercial auto insurance covers vehicles owned or used by a business. A commercial auto insurance policy usually includes:
- Collision coverage
- Medical expenses protection
- Personal injury cover
- Property damage
- Uninsured motorist coverage
For example, say you have an car accident while using a company car for business purposes. Commercial auto insurance covers bodily harm or property damage sustained during the crash.
Who can use commercial auto insurance? Well, your policy can cover anyone who regularly drives a commercial vehicle, including family members and employees.
As a Business owner do I need Commercial Auto Insurance?
Not every business owner needs commercial auto insurance. If you mainly use your car for personal reasons, including commuting, you probably don’t need this level of coverage.
However, you most likely do need it if you use a vehicle for work-related purposes. Work-related purposes include transporting goods for money (like a trucking or delivery company) or driving to job/work sites on a daily basis.
It also depends on the type of vehicle you want to insure. For example, dump trucks and tractor-trailers are often considered business-only vehicles and need a commercial policy. In fact, if you have a commercial license plate for any type of vehicle, you’ll need a business car insurance policy.
What Is the Difference Between Personal and Commercial Auto Insurance & which one do I need?
Personal and commercial auto insurance are similar products. However, there are some key differences.
- Everyone who drives a vehicle in the US needs personal auto insurance. Only certain individuals – such as business owners – need commercial insurance.
- Commercial policies usually offer higher coverage limits than personal insurance policies and typically cost more. The average commercial policy costs about $142 a month, but prices can vary significantly based on your needs.
- Personal insurance may not be sufficient to cover heavy or specialist vehicles, given the damage they may cause if there’s an accident.
Business vs. Personal Auto Insurance Cost
Commercial or business car insurance policies can cost more than personal auto insurance. Why? Because the coverage is often more extensive. Costs are based on various factors, such as employee driving records.
Does Commercial Auto Insurance Cover Personal Use?
In short, it can, but not always. Let’s break down the two main scenarios when commercial auto insurance will – and will not – cover personal use.
Employees Using Personal Vehicles for Work Purposes
Commercial insurance may not cover employees who choose to use a personal vehicle to run a workplace errand. It usually only covers business vehicles listed on the policy.
Employees Using a Vehicle Provided by the Company
If you give employees company cars, and you explain that they can use the vehicle for business and personal purposes, your commercial policy will cover personal use.
To be clear, personal auto insurance won’t cover commercial use. So, if you decide to start using your own car regularly for business purposes, and you don’t take out commercial auto insurance, you may not be insured.
Should I get both Commercial and Personal Auto Insurance?
Most commercial policies allow the occasional use of a business vehicle for personal use. However, you’ll need more coverage if you use your vehicle for both personal and business needs. In such instances, you will ensure your car is covered no matter why or when you get behind the wheel in the event of a crash or a mishap.
Not sure if you need both? As a summary, here’s how you can tell.
- Even if you drive to work every day, you don’t need commercial auto insurance on the vehicle unless you’re using it frequently throughout the day for work purposes.
- You do need commercial insurance if your company owns vehicles or you use a vehicle for work-related tasks.
