Commercial vs. Personal Auto Insurance: Which One Do You Need?

Thang Truong
Thang Truong
Updated on:

Insurance is insurance, right? Wrong! When you own a small business, there is a fine line between whether your personal auto insurance coverage is enough or you need commercial auto insurance. Many people need commercial auto insurance coverage and don’t realize they wouldn’t be covered in an accident because they don’t have it. 

How do you know which kind of insurance you need? When you think about it, insurance isn’t as complicated as we believe it is. Employing common sense and working with an excellent agent or broker can help to demystify the ins and outs of insurance coverage. 

Commercial vs. personal auto insurance: what are the similarities?

Commercial auto insurance is designed to protect you on the road like personal auto insurance. Many commercial policies offer the same basic coverages as personal auto insurance. Those coverages include liability, comprehensive, collision, and uninsured/underinsured motorist coverage. 

Both insurances typically have mandatory liability coverage, and, depending on your state and your coverage needs, the other coverages are add-ons. The more coverages you add, the more expensive your premiums will be, which becomes a balancing act between having enough coverage and affordable coverage. 

Commercial vs. personal auto insurance: what are the differences?

Commercial auto insurance policies cover your vehicles when they are used in the performance of business tasks. You or your employee can be driving the car and be covered, provided you are both listed as drivers on the policy. In addition to traditional coverages, commercial auto insurance policies can include some policies such as towing, rental reimbursement, and lease gap coverage. 

Some commercial policies are explicitly geared to a niche in the commercial auto industry. For example, a food truck driver would look for a specific policy to cover the risks associated with having a working kitchen inside the truck. In contrast, a florist with one delivery vehicle would need different coverages and limits. 

Commercial insurance policies, particularly those geared toward the trucking industry, could offer coverages you simply wouldn’t find in a personal auto policy. For example, you wouldn’t need bobtail coverage for your personal auto policy, but an over-the-road trucker could benefit from that coverage. 

Learn more at how commercial auto insurance is different from personal auto insurance

Commercial vs. personal auto insurance: who needs which?

If all you do is commute from home to work in your car, a personal auto insurance policy is likely enough coverage. You might not need commercial coverage if you occasionally travel from your retail location to a sister store in the next town. However, if you routinely use your car to deliver your products to your clients, a commercial policy may be exactly what you need. 

However, if you use your car for work regularly, even if you are self-employed, you will likely need a commercial auto policy. If you regularly drive your vehicle to transport people or goods for money, you will need a commercial auto policy. 

Are you regularly visiting store locations and job sites and logging mileage for work? A commercial auto policy is what you need. The same is true if you regularly transport items—tools or equipment, for example—as part of your work routine. 

If you make a morning coffee run for your co-workers, or your boss asks you to pick up the pizza he ordered for everyone’s lunch, your personal auto policy is sufficient coverage. If you are delivering pizza for the local Mom & Pop pizzeria and getting paid to do it (or if you are delivering for your own pizzeria), you need a commercial auto policy. If you picked up flowers at the local florist to take to a sick friend, you’re good with your personal auto policy. However, if you drive your car to deliver flowers for the local florist part-time, you need a commercial auto policy. 

Small business owners and self-employed persons often feel overwhelmed and confused by auto insurance choices. However, it’s less confusing if you look at how often you use your car as part of your job. 

You definitely need a commercial auto policy if your business owns your vehicle. For example, you’ve opened a home bakery and decided to purchase a mini van to transport your items to your clients. You decided to have the van titled in the business name. You will need a commercial auto policy; most personal auto policies won’t even consider insuring a vehicle that is owned by a business. 

Learn more why small businesses need to have commercial auto insurance

Commercial vs. personal auto insurance: what are the costs?

Generally, commercial auto insurance costs more than a personal auto insurance policy. Why? Because typically, commercial policies have higher limits which means more coverage and higher premiums. 

Personal auto policies cover an individual or a family driving their private vehicle. Commercial policies cover not just the individual but the entire business. That means there could be multiple drivers and vehicles on the policy, and everyone’s driving record is associated with the policy. 

While commercial insurance is typically more than a personal policy, it doesn’t have to be prohibitively expensive. A commercial policy’s cost will depend on your business’s specific attributes. A smaller business with only one vehicle on the policy will have a much lower premium than a large business with a fleet of delivery vehicles and drivers. 

Learn more at how much does commercial auto insurance cost

Factors affecting commercial car insurance rates:

The following factors profoundly affect how much you will pay for commercial auto insurance.

  • Your industry and the risks associated with it
  • The types of vehicles you use in your business
  • How many vehicles you have
  • How often you drive the business vehicles
  • The driving records of everyone allowed to drive the vehicles
  • The kinds of coverage you choose to get
  • The limits you put on your policies
  • Your auto insurance claims history

Those factors are the same as those considered for personal auto insurance policies, with a few exceptions. 

How to find cheap commercial auto insurance?

Commercial auto insurance is expensive. But there are ways to You may also save money by doing the following:

Work with an experienced agent

The correct agent can ensure that you have the appropriate level of coverage for your company’s needs. If you feel you don’t understand the policy and how to go about things, you can seek the help of expert agents.

Combine your coverages

If you bundle commercial automobile insurance with other company insurance policies or a personal auto policy, you may receive a lower premium.

Prepay your premium annually 

Some renowned providers will reduce your premium by 15% or more if you pay it in one payment rather than monthly installments.

Modify your policy details: coverages and deductibles

Choosing a larger deductible might help you save money on commercial vehicle insurance. However, ensure that the deductible is not too high, as you will have to pay for it if there is a claim.  

Decreasing your policy’s limits may also reduce your commercial auto insurance rates.

Compare several quotes  

Auto insurance policies differ from one company to another. So, to find the best price, ensure you contact many insurance companies and brokers. With that, you will obtain various quotes and compare providers and policy levels. The best way to obtain several quotes easily is to work with a broker like Simply Business, CoverWallet,, or Smart Financial. These brokers will be able get several quotes for you to compare and select the cheapest one conveniently.

Best commercial car insurance companies

Hundreds of insurance companies offer commercial auto insurance policies. It can be confusing trying to find the best one for you. We have done the research and here are the 10 best commercial auto insurance companies that we recommend for your consideration.

The takeaway

When it comes to commercial vs. personal auto policies, it can be confusing which you need to purchase. However, by using a little common sense and thinking about how you use your vehicle, you will be better able to decide what kind of policy you need. If you are still in doubt, speak with an insurance broker or agent to help you make a choice.

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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