If you own any type of business, you probably know that a Business Owner’s Policy (BOP) is an essential tool to have in your insurance arsenal. But it’s not the only kind of business insurance you need.
Your BOP doesn’t provide any coverage for vehicles, so you’ll need a separate policy if you want business auto insurance. (Trust us, you do!)
You might have heard from other well-meaning business owners that your personal auto insurance will cover business use. In most cases, this isn’t true.
Let’s take a look at the difference between personal and commercial auto insurance.
What’s the Difference Between Personal and Business Auto Insurance?
At first glance, the distinction seems simple: one type of insurance is for personal cars and one for business vehicles. And in many ways, both types of car insurance work the same way. However, there are some big differences.
Personal Car Insurance
As you’d expect, personal car insurance is for your personal vehicle; it often won’t properly cover a car in a company name.
Your personal car insurance will cover you, your medical expenses, and your vehicle if you’re involved in an accident. They do cover your commute to work, but most policies won’t cover any accidents that happened while you were driving between job sites, for example.
Commercial Car Insurance
Because of the higher risk involved, commercial auto insurance tends to have higher rates than a personal policy. On the upside, however, they also can have higher limits.
And speaking of limits, under a commercial policy, you will typically have a Combined Single Limit (CSL) rather than separate limits for bodily and property damage liability, as with a personal policy.
Where commercial car insurance really stands up against a personal policy is in the coverage. Your commercial policy will protect your small business assets if an injured third-party sues your company (something your personal policy won’t do).
Employee Drivers And Other Gray Areas
There are some areas where the difference between personal and commercial auto insurance gets a little less clear. Here are a few examples from the “gray area” between commercial and personal auto insurance.
Realtors who use their personal vehicles for business purposes to take clients from house to house are usually fine with a personal auto insurance policy as long as the vehicle is classified under “Business Use.” This ensures you get the proper rating and coverage for your needs.
Pizza delivery drivers will almost never be covered under their personal auto insurance, as the business is considered to be very high-risk. (You’re more likely to hit a stop sign if you’re trying to deliver eight pizzas in 30 minutes or less!)
In some cases, the pizza company that employs them may offer Non-Owned Liability coverage, but this generally protects the business against lawsuits, NOT the employee! So if Kenny accidentally hits a pedestrian or clips a BMW while making a turn, he is still on the hook for his own legal fees and car repairs.
Ridesharing drivers have some coverage from the company they drive for (Uber and Lyft, usually), but they don’t provide unlimited coverage at all times. These companies have designated time periods which determine whether you are covered and, if so, what your limits are. Uber and Lyft only provide coverage while you are logged into the app and working. But even then, this is “contingent” coverage, meaning they will only take over after your personal auto policy does its part.
As with all matters of insurance, there is no cut-and-dry formula for determining whether you have coverage. It’s best to have an upfront discussion with an independent insurance agent to determine the right level of coverage for you.
Do I Need Business Auto Insurance?
If you’re still wondering whether you need commercial auto insurance or not, here are some questions to help you decide:
Who owns the vehicle?
If your vehicle is registered under a business name, a personal car insurance policy likely will not cover it. You should look into getting a commercial insurance policy.
What type of vehicle is it?
If the vehicle is above a certain weight, you will not be able to put it on your personal insurance policy. Vehicles weighing more than five tons or that can haul more than a one-ton load require commercial insurance protection.
Who drives the vehicle?
If anybody will be driving the vehicle for work other than you (and, in some instances, one or two immediate family members), you will need commercial auto coverage.
What is the vehicle used for?
If you use the vehicle just for commuting between work and home, a personal car insurance policy should be enough. But if you regularly transport goods, equipment, or people as part of your work duties, a personal policy isn’t going to cut it.
What coverage limit do you need?
Personal auto insurance limits are fine for personal use, but when it comes to your business, the stakes are much higher.
A commercial auto insurance policy can provide more protection (both financial and situational) than a personal one.
Conclusion
Of course, the best way to determine the difference between personal and business auto insurance as it relates to you is to contact your insurance agent so they can go over coverage options.
Every person, business, and situation is unique, and you will have different coverage limits, premiums, and risk levels than another company, even one in the same industry.
At Harry Levine Insurance, our goal is to get to know you as an individual and business. That is why you’ll find us asking all sorts of questions that you may not think to be relevant—but they are! Click now for a free quote or feel free to call today with any questions. We are always happy to help.
Comments (11)
motor insurance
April 29, 2025Great post! Very informative and well-explained. Thanks for sharing such valuable insights!
Lily Young
November 24, 2024A truly informative piece! I loved how you broke down complex ideas into easy-to-understand points. Keep up the great work!
Clare Martin
February 3, 2024It was helpful to know that our car insurance will cover us, our medical expenses, and our vehicle when we get involved in an accident, so we can expect them to cover our commute to work but not if we’re driving between job sites. I need to get my car insured soon since this is my dad’s old car that is under his name because he only gave it to me recently when I got my license. I’ll take note of this while I look for a car insurance agency in Shepherdsville to hire for help soon.
Taylor Abrams
January 26, 2024My husband recently purchased a stylish new sports automobile, and I’m delighted to hear that he is quite satisfied with it. Anyway, he is currently carefully arranging to obtain the appropriate auto insurance coverage to make sure the vehicle is suitably insured, taking into account the investment and the special characteristics of the vehicle. He must be aware that in the event of an accident, your auto insurance will pay for your vehicle, yourself, and your medical bills. Although most insurance won’t cover any incidents that occur while you’re driving between employment locations, for example, I can understand how they do cover your commute to work.
Lily Bridgers
December 19, 2023I recently obtained my driver’s license, so last week my dad gave me his car. As a precaution, I must have the automobile insured in my name as soon as possible. Thank you for letting us know that having a personal auto insurance policy will assist us in paying for any injuries we get in an accident as well as any related repairs. I’ll be sure to remember this when I search for a car insurance agency to get in touch with shortly to ask questions about coverage for vehicle insurance.
Lily Bridgers
December 6, 2023I’m thinking about getting a full coverage auto insurance policy in light of the new SUV to avoid any future problems. If I were driving down the highway and a hailstorm turned my car into a golf ball target, I wouldn’t be able to salvage the artwork; instead, I would be left with a damaged masterpiece. Thank you for alerting me to the need for commercial insurance coverage for vehicles that weigh more than five tons or have a maximum payload capacity of one ton.
Clare Martin
November 30, 2023I appreciate you informing us that our personal car insurance will cover the medical expenses and the repairs for our vehicle if we are involved in an accident as long as we have the right coverage for these damages. My dad gave me his car now that I finally have my driver’s license, so I plan to get the vehicle insured under my name soon. I’ll take note of this while I look for an automobile policy available here in Morehead once I find a good insurance company to contact soon.
Clare Martin
September 12, 2023My dad gave me his car after I got my license last week, so I need to have the vehicle insured under my name soon as a safety measure. I appreciate you informing us that a personal car insurance plan will help us financially cover medical expenses and repair costs if we are involved in an accident. I’ll be sure to take note of this while I look for an insurance company in Sumter to contact for inquiries about auto insurance policies soon.
Julie Levine
September 12, 2023Clare,
Glad you found our blog helpful We can help you with auto insurance, feel free to give us a call!
Julie Levine
Olivia Smart
November 30, 2021Thank you for talking about how you can determine if you need commercial auto insurance or personal auto insurance. My friend has been a little confused about this. I’ll be sure to pass this on to see if it can help her to see which one best suits her specific circumstances.
Ethan Goodson
October 26, 2021The article really cleared up the confusion about personal auto and commercial auto insurance. The grey areas were covered quite well. Thanks! Looking forward to read more.