Personal Auto Insurance vs. Commercial Auto Insurance: Understanding the Difference

Portrait of a businesswoman and male coworker driving a car on a business trip

When you’re shopping for an insurance policy, you have many options available to you. However, one of the options many people skip over and don’t really think about is whether or not they need a personal auto insurance policy or a commercial auto insurance policy for their vehicle. Too many people think that they just need a personal policy, then realize that they needed commercial insurance coverage when they file a claim or get into a collision.

But what’s the real difference between personal and commercial vehicle insurance policies? Do you need commercial coverage if you’re a small business owner? A freelance writer? A pizza delivery person? Let’s highlight the differences and clear the air about personal auto insurance policies and commercial vehicle insurance to properly determine which plan you need.

Personal Auto Insurance Basics

Personal auto insurance covers the personal use of your vehicle. Whether it’s to pick up groceries, transport your kids to soccer practice, or going on a road trip, personal auto insurance covers you for those purposes. If you are an employee and use your car to drive to and from work, this counts as personal use.

Commercial Auto Insurance Basics

Many people are confused as to what commercial insurance covers. Commercial insurance is built for freelancers, small business owners, and other people who use their car primarily for work or business needs. It offers higher liability coverage and other benefits to legally protect your business assets and employees. Typically, most personal auto insurance plans offer too little coverage to properly protect a business vehicle in terms of liability and property damage.

Who Needs Commercial Coverage?

If you use your car primarily for business purposes, you’ll like need to find cheap business vehicle insurance to not only properly protect yourself, but to stay legal. If you are using your vehicle for your business, freelancing, hauling items/equipment for your job, or charging money for transportation, then personal auto insurance may not provide enough coverage for you.

It’s important to note that “commercial insurance” isn’t shorthand for “commercial truck insurance.” Even vocations such a food delivery or driving for ridesharing services like Uber will require drivers to get a commercial auto policy in order for them to be properly protected. If you regularly drive long distances to meet with clients or visit a jobsite, you may need to get commercial coverage due to the frequency and distance you are traveling for work purposes. It’s a common misnomer, but commercial insurance isn’t just for a fleet vehicle. It may sound like a pain for people who use their car for their business, but there are some benefits to having a commercial insurance plan, too.

Who Doesn’t Need Commercial Coverage?

As mentioned before, if you drive to and from your job while not using your car for any other business purpose, then you don’t need a commercial policy. If you are a freelance writer that works from home or some similar profession, you won’t need a commercial plan since you are not primarily using your vehicle for business purposes. If you drive a snowplow, a van with your work tools, or drive long distances to various worksites for your freelance work or business, then you’ll need commercial coverage.

You will need to look into getting a commercial car insurance plan if you use your vehicles for the following services:

  • Charging a fee to use your vehicle to transport goods or people
  • Hauling a considerable weight or equipment/tools
  • Towing a trailer used to conduct your business
  • If ownership of the vehicle is in the name of a corporation or partnership
  • If employees operate the vehicle

Do I Need Commercial Coverage?

There are some jobs where a person may or may not need commercial coverage, depending on whether certain business is done on a full-time or part-time basis. If you deliver pizzas or act as a courier, check with your local laws to see if you need commercial coverage. Sometimes, like in the case of pizza delivery drivers, your name and car can be included to the pizza’s shop commercial policy. It also varies by state whether or not you require coverage if you drive part-time for ridesharing services.

The best way to get accurate answers is to contact your insurance agent and tell them exactly what you do with your vehicle. They can then guide you to the correct plan that will give you the right coverage and keep you within the law.

Now that you know the differences between personal and commercial auto insurance, you have a better idea of what kind of coverage you need. Freeway Insurance can offer you the best insurance options curated from the top insurance companies in the country. Get a free auto insurance quote or commercial vehicle insurance quote online today.