Commercial vs Personal Auto Insurance: Which is the Best Choice for Me?

There are so many choices that you have to make regularly: do you want dish or cable? Do you want Chinese or burgers for dinner, etc.? However, some decisions have a larger impact on your life than others. One of those major choices is what type of auto insurance coverage you have to protect you. Here we help you navigate through the different types of insurance. That way you can  decide which policy is the best choice for you: commercial auto insurance or personal auto insurance?

What are the most important factors to consider when choosing a policy?

Before choosing an auto insurance policy, there are several factors to consider before making your final selection. These factors include: 

• Who owns the vehicle – If the vehicle is owned by a business, your best choice is commercial. If it is for personal use, personal auto insurance coverage will be your best option. 
• How often the vehicle is used and what it is used for – Depending on whether your vehicle is a daily driver for personal use, or if you use it solely to perform work-related tasks will also affect which type of coverage you should choose. 
• The type of vehicle you are driving – If you are driving a typical sedan or SUV, a personal auto insurance policy might be best for you. If you are driving something more industrial or heavy-duty, commercial auto insurance policy is best. This is because when compared to regular cars, heavy-duty vehicles have the potential to cause more damage and can be very expensive to repair. 
• Liability limits – whether you are a business owner or you are self-employed, if you are driving your vehicle for business purposes, you will probably want to go with commercial insurance because vehicles used for business typically require higher liability limits. Personal auto insurance coverage has significantly lower liability limits, so you want to make sure that you have as much coverage as you need. 

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Commercial auto insurance

What exactly is the difference between commercial auto insurance and the other types of policies? Unlike personal auto insurance, commercial policies have higher liability limits, which also means that they are more expensive. As mentioned earlier, commercial policies cover a wider range of vehicles. This includes heavy-duty vehicles, sedans and SUVs. 

The people that commercial auto insurance covers differs greatly from other types of policies as well. If you own a business, commercial policies will cover all of your business employees that use work vehicles while they are on the job, as long as they have a valid driver’s license. 

Commercial policies also cover vehicles used for specific purposes. These include: 

• Transporting goods for business or equipment
• Transporting people for business purposes
• Driving to a location where you will be performing a service for a business
• Charging a fee to transport them (taxi,Uber, etc) or their goods
• Towing a trailer for business

If you meet any of these qualifications, then a commercial auto policy is the best option for you. 

Personal auto insurance

People are more familiar with a personal auto insurance policy because everyone is required to have coverage for their personal vehicles, but knowing what they will and will not cover is also beneficial if you want to be protected as much as possible. Personal auto insurance policies will cover most accidents and damage incurred during personal use. They usually only cover work-related use if you are driving your personal vehicle during your commute. 

They will not cover vehicles used for business purposes. Nor if you get into an accident while driving to complete a job. Another potential issue is that while personal auto insurance policies are significantly cheaper than commercial auto insurance policies, that also means that personal policies include less coverage and lower liability limits. If you or someone else is injured when you are using your vehicle for work-related purposes, a personal policy will more than likely reject the claim. Therefore, leaving you stuck with all of the financial responsibility. 

Hired and non-owned auto insurance

If you do not quite meet the criteria for the commercial policies, but you do not quite meet the requirements for the personal policies, there is also a third option: hired and non-owned auto insurance. Hired and non-owned auto insurance is for drivers using their personal vehicle for work-related purposes. Typically, purchased by business owners. It covers employees who use their cars for delivering goods for a business or completing a work-related task. 

It is also useful for business owners if they decide to rent or lease vehicles. While hired and non-owned policies have many benefits, they do have one setback. They only cover legal bills from the accident and do not cover vehicle damage. This is why you would purchase this policy in addition to another policy. Because damage to any vehicle, whether a sedan or industrial vehicle, is going to be costly. 

Final thoughts

Whether you own a large business, are thinking about starting a small business, or drive your car to deliver goods or services for your employer, there are many options regarding coverage for you and your vehicle. Do your research before selecting an auto insurance policy. Compare policies and speak to a licensed insurance agent before you make a final decision.