Difference Between Commercial & Personal Auto Insurance


Should you carry a commercial auto insurance policy for your business? This is a question many owners of emerging businesses grapple with. The answer depends on the kinds of vehicles you and your employees use in the daily course of business, and what they’re used for.

Commercial auto and personal auto insurance have a lot of similarities in terms of the fundamental types of protections they offer. But one of the key differences with a commercial policy is that it gives you the ability to protect yourself and your business from exposure to uncovered liabilities that result from a serious accident.

Auto Insurance That Protects Your Car and Bottom Line

As with personal auto insurance, a commercial auto policy can be structured to provide financial protections against personal injury and other liabilities, as well as coverage for collisions and uninsured motorists. And you can purchase comprehensive coverage that will insure you against damage to your vehicles caused by risks like fire, theft, hail, and floods.

Commercial auto insurance typically provides for higher policy limits than personal auto. The point here is to safeguard your business assets from lawsuits and other liabilities.

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Insuring Employees

Under most commercial auto policies, your employees who drive your insured vehicles will be covered under the policy’s terms. And, under most of these policies, your employees’ own vehicles will be covered when they’re used for company business—if and when any claim expenses exceed the limits of their personal auto policies. Coverage for your employees will also extend to their use of a rented vehicle while working for your business. But policies do vary. You should be sure to consult with your insurance professional to make sure you’ve got all the bases covered.

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Specialized Coverages

There are many specialized coverages offered through commercial auto insurance. Some insurers include these for no extra cost. These include insurance for:

  • Physical damage to hired and borrowed vehicles, if a rented or borrowed vehicle used for your business is damaged
  • Lease or loan gaps—these gaps occur when a vehicle is totaled and the actual cash value of a car that you’ve either leased or have been making payments on is less than the amount you’d owe to a rental company or a bank
  • Theft or damage to a vehicle’s electronic equipment, such as a permanently installed GPS or DVD player
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