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What’s the Difference Between Commercial and Personal Vehicle Insurance?

african american woman standing out front of company van

The simple definitions of commercial auto insurance and personal vehicle insurance are pretty straightforward and easy to understand. Commercial auto insurance covers vehicles used by your business. Personal coverage is when you use your car for, well, personal use. 

While this is fairly basic, more subtle differences can be major factors in determining the kind of policy you buy for your company or yourself. Take a deeper dive, and you’ll see that commercial auto insurance and personal auto insurance are actually two very different things. 

Your Personal Auto Insurance Policy Won’t Cover Your Commercial Vehicle Use 

Don’t worry — you can still use your personal car insurance to commute to and from work. But you shouldn’t use it to deliver goods to customers, tow work trailers, or ferry tools, equipment, or work crews to and from job sites. Or for the use of your employees to do any job-related travel. 

If you simply go to and from the office and don’t have employees who drive during their shifts as part of the job, your personal auto insurance policy is all the protection you need. An example of this scenario is if you work out of an office or at home and rarely, if ever, visit clients or customers. 

But when your job, or the job of others in your employ, requires driving to get the work done and you provide the vehicles for that purpose, you need commercial car insurance. That can include everything from owning a pizza shop with a delivery service to operating a marketing company with salespeople who are meeting clients all over the city. A couple more examples: you’re a general contractor who needs to move workers and gear from one job site to the next, or you work solo and contract to drive for a rideshare company. 

Here’s another way of looking at whether you need commercial or personal vehicle insurance coverage: if your business owns the vehicle, you need to obtain commercial vehicle insurance. 

Commercial Vehicle Insurance Costs More than Typical Personal Car Insurance 

The reason for the rate variation is that your commercial policy comes with higher coverage limits. 

In many ways, the two types of policies look very much alike. For example, you can buy collision insurance and comprehensive coverage and liability insurance with both personal and commercial vehicle insurance. You can also get roadside assistance and uninsured motorist coverage with both. 

The cost difference has to do with the fact that each of your commercial vehicle policies might offer as much as $500,000 or even $1 million in damages. That’s much more than you’re likely to carry on your personal auto insurance policy. 

This is necessary for a lot of reasons. If your business fleet consists of pickup trucks or heavier vehicles, that can cause more damage to other drivers, passengers, and personal property. Also, if you have several employees driving multiple work-related miles a day, the odds of eventually sustaining a costly accident are higher. 

And finally, if you have a crew of drivers, one or more might not be as responsible a driver as you are with your personal vehicle. So be ready to assume higher coverage limits with your work fleet than with your personal vehicles. 

It’s Important to Hire Workers with Clean Driving Records 

One of the larger determining factors for what you’ll pay for commercial vehicle insurance is the driving record of workers who’ll drive your fleet vehicles on the job. 

This makes sense when you think about it. After all, you know when you go to negotiate rates for your personal vehicle that your driving record plays a big part in what you’ll pay. The possible difference to your business policy is that you might have numerous drivers over the course of a year. That’s true even if you only have a single vehicle in your “fleet.” 

That’s why it’s so important to make a review of driving records a part of every interview of job candidates. Your first step is to make sure that they actually have a valid driver’s license in your state. If an employee gets in an accident and has a suspended license or has never been licensed in your state in the first place, your company is highly vulnerable to getting sued. 

With the job applicant’s permission, you can access their driving records from your state’s Department of Motor Vehicles. 

caucasian delivery driver in company truck

You Can Determine the Rates You Pay by Setting Deductibles 

Your deductible is an important cost factor for your commercial auto insurance provider — just as it is with your personal auto insurance coverage. 

The deductible is the amount you’ll pay out of pocket before your insurer’s coverage kicks in. The higher your deductible, the less your insurer will be responsible for — and your insurance rates will reflect that reduced risk on their part. The difference can be considerable even for one personal vehicle. Now imagine an entire company fleet receiving similar rate reductions. 

Of course, a higher deductible will cost you more in the event of a collision or other damage. That’s another reason it’s important to only hire drivers with clean records and enforce safe-driving regulations. 

Start Rate Negotiations by Meeting an Independent Insurance Agent 

A broker representing a single insurance company might be able to get you the best possible coverage at the lowest cost from their company. In other words, your options are limited. 

On the other hand, an independent insurance agent has a greatly expanded portfolio of options. That’s because independent agents don’t work for a single insurance company. They represent multiple carriers. That means they can learn about your company and its unique commercial vehicle insurance needs and then go shopping on your behalf. 

Your independent insurance agent can find the best deal for your business based on rates and features from the multiple options they represent. 

Find Affordable Commercial Vehicle Insurance Online Today 

Whether you’re looking for personal auto insurance or a commercial vehicle insurance policy, your independent insurance agent at Freeway Insurance will present you with multiple options. Call us at (800) 777-5620 or get a quick insurance quote online. You can also find a Freeway office near you to meet with a knowledgeable agent. 

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