When carrying commercial auto insurance, your coverage must meet the state liability limits. Your agent can help you understand the minimum coverage limits. However, if you own a business vehicle, you need to know the difference between personal and commercial auto insurance.
Personal vs. Commercial Car Insurance
When differentiating between commercial and personal car insurance, one of the main differences involves the role of the person or entity that owns the vehicle. If the business is the vehicle owner, then you need commercial auto insurance. At a minimum, you need the coverage required by law in the state in which you registered your business.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance pays for accidents when you or an employee drives a company-insured vehicle. It can pay for vehicle damage, liabilities, bodily injuries and other settlements. However, commercial insurance has higher claim limits, handles more complex legal issues and can covers such commercial vehicles as trucks, vans and transportation vehicles.
When you purchase commercial auto insurance, your employees become additional insured. So long as the employee has a valid license, they can operate the vehicle. Of course, it merits consideration whether you should insure an employee who has a poor driving record. Doing so adds risk to your policy and might create higher costs.
You need a business policy if you use the vehicle for the following purposes:
- Transport clients or goods
- Charge passengers to ride
- Charge to transport goods
- Haul heavy loads
- Tow a commercial trailer
- Travel significantly for business-related activities
Simply driving a personal car to work does not merit a policy. A vehicle branded by the business, or provided by an employee to use full-time will, however.
Along with higher coverage, commercial auto insurance safeguards your business against legal actions taken by other parties following an accident. Liability coverage can pay for these losses. Coverage can also include policy options geared toward business clients. This might include coverage of transported goods and equipment.
Personal Car Insurance
Personal auto insurance doesn't cover commercial accidents. So, if you have a wreck while driving to work, then this coverage will apply to your losses. The primary driver and one or two other household members typically appear on the policy.
Personal coverage must adhere to state-mandated coverage rules. So, you may wish to make an appointment with a trusted agent to review what your current policy pays for. A knowledgeable agent can explain specific exclusions in the policy related to commercial use. Know the difference between personal and commercial auto insurance to avoid rejected claims.
Get A Quote