You know you have to have auto insurance to drive legally. You may also know that if you drive for business purposes, you need to have commercial auto insurance. However, if you drive your car for both business and personal purposes, does it mean you need to have both commercial and personal auto insurance? Continue reading to learn more about which kind of insurance you might need.
Commercial auto insurance vs. personal auto insurance
People often think that their auto insurance policy will cover them if they have an accident while on business. Sometimes, it might. However, you need to be sure. The first step in knowing for sure what insurance policy you need is to understand the difference between commercial and personal insurance policies.
Commercial auto insurance protects those automobiles that are used mainly for business. It can be a dedicated company vehicle or a personal vehicle. Coverages protect you from claims of property damage, liability, or injury. You can customize your policy to match the needs of your business.
Personal auto insurance is that policy that we all carry on our personal vehicles. We are all familiar with those policies and how they work. However, many of us don’t realize that a personal policy often won’t cover us if we are using the car for business purposes.
Learn more at the difference between commercial auto insurance and personal auto insurance
Do I need both commercial and personal auto insurance?
The short answer is no, you don’t need both commercial and personal auto insurance. If you routinely use the same car for both business and personal use, your commercial auto insurance may be enough to cover you. This is especially true if you have employees who occasionally drive your car. Commercial auto policies can also cover them, provided they have clear permission to drive the vehicle.
This concludes that if you drive your car for both business and personal purposes, you don’t need to have both commercial and personal auto insurance policies. A commercial auto insurance policy will provide sufficient coverage for you.
Many states require that business-owned vehicles be covered by commercial auto insurance. Most personal auto insurance policies don’t provide adequate liability coverages for business uses. If you usually use your car for personal use but occasionally drive it to a client’s location to do business, you may not be required to have commercial auto insurance.
Learn more at why small business owners need to have commercial auto insurance
Does commercial auto insurance cover personal driving?
One question you may have about commercial auto insurance is whether it will cover you if you are driving the company car on personal errands. If you, or your employee who has permission, are driving your business vehicle on personal errands, your commercial policy might cover you. Typically, if you have an accident in your company vehicle while on personal business, your commercial insurance will cover it.
If you want to ensure that you will be covered in the event of an accident in your company vehicle, discuss your coverages with your insurance agent or broker.
Things to consider when deciding if you need personal or commercial auto insurance
There are a few things to consider when determining which kind of insurance you need.
- Who owns the vehicle, and who drives it? If the business is the title owner of the vehicle, you will need a commercial policy. However, this might be different if you are a sole proprietor.
- How is the car used? If it’s used primarily for business purposes, you’re looking at a commercial policy again. Again, the rules are a little different for sole proprietors.
- What kind of vehicle is it, and how much does it weigh? You will likely need a commercial policy if you drive a particularly heavy vehicle. Anything heavier than your normal pickup or SUV usually needs more coverage than a typical personal auto policy provides.
- What are the business liability limits in your area? If you need particularly high liability limits, you’re likely going to need a commercial auto policy.
The best way to determine what kind of insurance policy you need is to consider the type of coverage you need. Think about how you use your vehicle and consider how often you drive. Also, realistically look at whether using the same vehicle for both business and pleasure is working for you or if you should have different vehicles for each purpose.
Finally, discuss your needs with an insurance agent or broker when in doubt. After all, they are the experts on what policies cover and how to get the right policy.
Commercial auto insurance costs
It is true that commercial auto insurance is often more expensive than personal auto insurance for the same car and the same driving person.
The average cost of commercial auto insurance for small businesses is $175 per month or $2,100 per year. Most small businesses pay between $120 to $250 per month depending on several factors such as the car itself, the nature of your business, the driver’s driving history, location, etc.
This is just the average. Your rates will be different. Be sure to shop around with a few companies or work with a broker like Simply Business to compare several quotes to find the cheapest for you.
Learn more at how much is the average cost of commercial auto insurance
Best commercial auto insurance companies
Hundreds of insurance companies offer commercial auto coverage to small businesses. Here are our recommendations for the top providers.
- Progressive: Best Overall
- biBERK: Best for low-cost coverage
- THREE: Best for affordable comprehensive coverage
- Simply Business: Best for comparing several quotes
- InsurePro: Best for short-term coverage
Learn more at the best commercial auto insurance companies
The takeaway
When determining if you need both personal and commercial automobile insurance, you need to consider how you use your car. Learning what each kind of insurance provides and who will be covered by each policy can be extremely helpful for making the decision. If you’ve found that you use your car more for business than anything, you need a commercial policy due to liability issues. However, if you only occasionally use your car for business, your personal policy might be enough.
The best way to know what kind of policy will be best for you is to discuss your needs with an insurance agent or broker.
