Personal Auto Policy vs Commercial Auto Policy

Personal Auto Policies Vs Commercial Auto Insurance Policies

Small business owners often think that their personal auto policy will provide sufficient coverage for their insurance needs. For some, such as a sole proprietor, this could be the case, but for many, a commercial or business auto policy needs to be obtained.

There are many factors that determine if you need a personal auto or a commercial auto insurance policy.  As a small business owner, these can help you determine what kind of policy you need.

·         Ownership – If the vehicle is a business owned vehicle and registered under the company name, it cannot be covered under a personal auto policy. You will need a Commercial auto policy for vehicles that are registered under a company name. A sole proprietor who uses their vehicle for personal use and some light business use could be covered by a personal auto. 

·         Liability Limits – Vehicles that are used in the course of business sometimes need to have liability limits that are much higher than what a personal auto policy can provide. Companies who need to provide proof of insurance to satisfy contractual obligations often will need limits that are only available on a commercial auto policy. Limits are higher on commercial auto policies, and lawsuits typically result in high liability settlements, which would most likely be over the limits provided on a personal auto policy, leaving the business owner responsible for paying the rest out of pocket.

·         Vehicle Weight and Type – Personal Auto policies are intended to cover personal vehicles and regular pick-up trucks only, not commercially rated vehicles. Heavy vehicles such as box trucks, semi-trucks, trailers, tow trucks, etc. can only be covered via a commercial auto policy. If your vehicle has equipment installed, then you will need a commercial vehicle policy. Equipment can be things as common as toolboxes and ladder holders.

·         Vehicle Use – Is the vehicle only used for business purposes? If so, then it will need to be insured on a commercial auto policy. If it is used only for commuting to work and you are a sole proprietor, then you might be able to insure the vehicle on a personal auto policy. Are the vehicles used by other employees or to transport goods or people, if so, then it needs to be on a commercial auto policy.

Commercial insurance policies offer much more in the way of coverage than a personal auto policy. While it is more expensive, it is better than finding out after having a claim that you have no coverage for using a personal vehicle for business and having your insurance company deny the claim. Higher limits also protect your business better; as mentioned above about the liability limits.

One such coverage that requires the purchase of a commercial auto insurance policy is Hired and Non-Owned Auto coverage. Hired and Non-Owned Auto is not covered under the personal auto policy. If a business has employees that use their own cars for business purposes, such as going to the bank or running a work-related errand, and there was an accident, the other party could sue the business for any damages. A personal auto policy would not provide any coverage for this exposure. Hired and Non-Owned Auto can be added to Commercial Auto policies, and even to some Business Insurance policies.

We have excellent relationships with commercial auto carriers. They can get your business covered correctly and for an affordable coverage so you have the peace of mind that your business auto coverage will cover your exposure. Call us today if you would like to discuss your quote options.