Commercial vs Personal Auto Insurance

The subject of commercial vs personal auto insurance may bring up some valid questions. What is the difference between the two? When should I consider commercial auto insurance? Is commercial auto insurance more expensive than personal auto insurance?

Personal Auto Insurance is designed for individuals or a family and meets the needs of these consumers. It protects against personal assets if an auto accident is to occur. It can provide funds to fix the vehicle, pay for medical expenses or and liability charges (if you caused the accident). This is typically required in order to legally drive in most states.

Commercial Auto Insurance, on the other hand, is designed for the need of businesses that have multiple vehicles and drivers. These are typically in the company’s name and can specify which employees are covered when driving the vehicle.

Personal Auto Insurance Coverage Options

  • Collision-Only Coverage: covers a collision between your vehicle and another car or object.
  • Comprehension Plans: covers collisions along with other types of damages to your vehicle such as theft, vandalism, and natural disasters.
  • Uninsured and Underinsured Motorist Coverage: reimburses you, a family member, or designated driver if one of the following persons are hit by an uninsured, hit-and-run driver, or a drive with insurance who has an insufficient insurance provider who is unable to pay for total losses.
  • Property Damage Liability: pays for damage that is caused to someone else’s property; for example lamp posts, fences, buildings, or other structures that are struck.
  • Personal Injury Protection (PIP): pays for the treatment of any injuries endured to the driver and passengers of the policyholder’s vehicle; these also cover medical payments, lost wages, and costs of replacing services normally performed by the injured person.
  • Bodily Injury Liability: covers any injuries that the policyholder may cause to someone else; this also extends coverage of the policyholder and their family when they are driving another vehicle with the other person’s permission.

Commercial Auto Insurance Coverage Options

  • Blanket Coverage: for all employees; this is to ensure that if an employee is in an accident in a company vehicle, the company will not have to pay out of pocket expenses or be held liable for the employee not being covered by insurance; employees are also not liable to be sued under this coverage.
  • Liability Insurance: covers when an at-fault accident occurs in a company vehicle and damage is caused to the other vehicle or another’s property; it also covers any bodily injuries caused in lieu of the accident.
  • Physical Damage Coverage: covers collision and theft of any company vehicle when driven during company hours and for company purposes.
  • Uninsured Motorist Coverage: occurs when bodily injury is sustained to an employee or passengers in the company vehicle and the other party does not have any auto insurance; it has a cap on the expenses paid based on the coverage amount a company has chosen for the vehicle.
  • Hired Auto Liability: provides excess liability coverage for a non-owned, rented, leased, hired or borrowed vehicle for incidental used of the business.
  • Employer’s Non-Ownership Liability: provides excess liability coverage for the employer and the company in the event of an employee using their own (unlisted) vehicle incidentally in the course of the business.

Other options can include on-hook towing liability, additional/custom equipment, med-pay, rental reimbursement, and property damage.

When Do You Need Commercial Auto Insurance?

The best justification of this is when you use a vehicle solely for business purposes, especially when you own a business. Also, it is best to obtain commercial auto insurance policy when a vehicle has commercial tags on it. Other facts you need to look at before deciding include:

  • Registration: if a vehicle is registered in the name of a business then it is a definite need for a commercial policy; however, if you are the sole owner of a small business then it is the purpose in which the vehicle is being driven.
  • Who Drives the Vehicle: if you have other employees that are driving the vehicle then it would be time for a commercial policy; these policies allow the owner to list employees as the drivers so that the insurance company can underwrite the risk on the vehicle.
  • Business Use: this is defined as the vehicle being used for commercial purposes more than 3 times in a 1-month duration; business use can be defined as:
    • Traveling to clients or job sites
    • Carrying equipment
    • Carrying hazardous or flammable material
    • Equipped with cranes, winches, snowplows
    • Towing for hire
    • Delivery of goods
    • Rural newspaper delivery
    • Trucking (local and long haul)
    • Messenger, deliverer, chauffeur
    • Taxi/Uber driver
  • Policy Add-Ons: if you need to add coverage for a third party as an additional insured, waiver of subrogation (prohibits the insurer from attempting to seek restitution from a third party who causes any kind of loss to the insured), liability coverage for hired or non-owned vehicles, and liability coverage for mobile equipment.

Is Commercial Auto Insurance More Expensive?

In comparison to personal car insurance policies, commercial auto insurance can be more expensive. This is due to multiple vehicles that may have specialty uses and the various drivers in these vehicles. Commercial drivers typically have different driving behaviors and the amount of risk can be greater, so a company may need to fully cover any liability risks. Commercial vehicles are also typically more expensive and are late-model versions. These types of vehicles need to carry full-coverage insurance.

When a company is using trucks, trailers, refrigeration or modification; as well as the carrying of hazardous materials or if a vehicle incurs high weekly mileage rates can also cause an increase in insurance expenses. Although commercial auto insurance may result in higher expenses than personal auto insurance the value of the coverage for multiple drivers and vehicles far outweighs and costs the company can incur without protection.

Still Have Questions About Commercial Auto Insurance Coverage?

At Compass Insurance Agency, we have agents that are here to aid you in all your company’s auto insurance needs. With our agents dedicated to finding the best and most affordable coverage options for your company. Just call or click a link to get started.

 

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