Trying to decide between commercial auto insurance and personal auto insurance can be tricky if you ever use your vehicle for work purposes. It can be difficult to decide which coverage your vehicle needs.
As a rule, you need commercial auto insurance if you use your vehicle for business purposes. Although you own the vehicle and not your company, personal auto insurance won’t necessarily cover you or the items you’re transporting after an accident during work. Knowing which insurance you need is a matter of examining the frequency you use your vehicle for work. If you only use your vehicle to commute and go to lunch, your personal auto insurance should be enough to cover you. If you use your vehicle to frequently visit or drive clients, you may need commercial auto insurance. Speak with your employer about whether your vehicle is covered beneath their policy. If they do have coverage for employee vehicles, you will still need an insurance policy.
| Personal Auto Insurance: |
Commercial Auto Insurance: |
| Commuting to and from work |
Transporting work equipment |
| Occasionally taking a client to work |
Frequently transporting people |
| Occasionally picking up food for the office |
Delivering food for payment |
| Vehicle is used primarily for personal purposes |
Vehicle is used frequently for work purposes |
Is Personal Auto Insurance Cheaper than Commercial Auto Insurance?
Prices for auto insurance vary depending on a variety of factors, such as the driver’s age, gender, location, credit score and more. Commercial auto insurance may cost between $750-$1,200 a year for one vehicle while a personal policy costs an average of $1,502 a year
You must be honest with your insurance company, however. You can’t purchase commercial auto insurance for a personal vehicle if that vehicle is not used for work purposes. If your insurance company discovers a discrepancy in what you’ve been using the insured vehicle for, they are within their rights to drop you. After you’re dropped from an insurance agency, it may be harder to find car insurance at a cheap rate. Consider how often you use the vehicle for work before deciding on which coverage to purchase.
Both personal auto insurance and commercial auto insurance provide comprehensive, collision, uninsured and underinsured motorist, liability and personal injury protection coverage. There are also optional coverages such as inland marine insurance for commercial vehicles that transport equipment and other expensive items owned by a business.
Also Read: When Does a Business Owner Need Commercial Auto Insurance While Driving Their Own Truck