What is the Difference Between Commercial Auto and Personal Auto?
Most drivers with a personal vehicle carry personal auto insurance in order to protect their assets in case of an accident. Not all vehicles are personal vehicles, however, and personal auto insurance isn’t the only option.
Commercial vehicles are vehicles owned or used by a business for work purposes. For example, if you are a contractor who uses a van to transport equipment between projects, that van is a commercial vehicle and should be covered under a commercial auto insurance policy. Some vehicles are made for commercial use, such as eighteen wheelers, vans, buses, etc. Other vehicles are made for personal use but can be used for business, such as company cars.
The main difference between these two vehicles is how they are used and the insurance they need.
What is Commercial Auto Insurance?
Commercial auto insurance is a policy specifically geared to cover commercial vehicles. This policy provides a lot of the same coverages as a personal auto insurance policy, such as:
Comprehensive Coverage: Comprehensive coverage provides compensation for damages to the vehicle due to fire, wind, hail, falling objects, theft, vandalism and more.
Collision Coverage: Collision coverage provides compensation for damages to the vehicle due to collision with another vehicle or object.
Liability: Liability insurance covers bodily injury and property damage a driver may cause while operating the insured vehicle.
Medical Payments: Medical payments coverage provides compensation for the driver’s and passengers’ medical expenses, no matter who causes the accident.
Uninsured/Underinsured Motorist: This coverage provides compensation for accidents involving a driver that is not carrying insurance.
Do I Need Commercial Auto Insurance or Personal Auto Insurance?
It’s important to understand the distinction between these policies and where they apply. The average personal auto insurance policy will not cover a vehicle that is frequently used for work. On the other hand, commercial auto insurance can cover personal use but must only be used on work vehicles. If you only use your personal vehicle to commute to and from work, you likely need a personal auto insurance policy.
If you frequently use a work vehicle or personal vehicle to transport equipment or products, you may need commercial auto insurance. Keep in mind that your insurance provider can cancel your policy if they discover that your personal vehicle is insured with commercial auto insurance but is not being used for work, and vice versa.