Commercial Auto vs. Personal Auto Insurance: What’s the Difference?

Have you ever thought about what your auto insurance covers should you decide to use your personal vehicle for work? Maybe you’ve taken a delivery driver position in your spare time to earn a few extra dollars, or you have started your own company and bought a new vehicle. 

So, in such cases, do you simply add them to your personal insurance, or do you take out commercial auto insurance?

Insurance policies can be confusing. Therefore, this blog will break it down, so you have a better understanding of exactly what type of coverage you need and why. 

Commercial auto insurance firstly relates to any vehicle that you use for work. Personal auto insurance covers your own personal vehicle that you use for grocery shopping or taking day trips with your family.

Each kind of insurance comes with different types of coverage and payable limits and even protects against various risks that you can encounter while on the road or at a job site.

Personal Car Insurance

Let’s start by looking at personal auto insurance. Anyone who owns a vehicle will know that it is mandatory to have some level of coverage. 

Everyone’s policies are different. It will thus depend on what you use your personal vehicle for and how often you drive it. 

Typical personal insurance covers and protects you against damage caused by fire, theft, or a collision. You can add protection for windshield damage, third-party liability, and even family protection. 

If you lease your vehicle, you must get comprehensive insurance. This will protect the vehicle against a wide range of risks and is a requirement of all dealerships and financial lenders.

Most policies will also take into consideration how often you drive and how far. This will have an impact on your premiums, and if the vehicle is not used a lot, it can reduce them.

Personal auto insurance policies can also provide you with accident forgiveness. Thus, in the event of a not-a-fault accident, your premiums are protected and won’t increase.

You can even merge your car and home insurance policies, therefore giving you even more savings in the long run.

Commercial Car Insurance

Essentially, if you use your vehicle for any kind of work, you will need separate, commercial auto insurance. 

It is also a requirement for all business owners to have separate insurance, not just for tax and accounting purposes but also in terms of what is covered.  

This applies to any type of vehicle, such as a taxi cab, food truck, modified pick-up, or work van. Should you transport goods or people, or use the car to take your tools to job sites, you are exposed to more risks than if you took your personal vehicle to the mall (for example). 

This insurance is designed to cover you, your employees, the vehicle, and even third parties involved in an accident. Some personal insurance may cover commercial use to an extent, but it’s not worth the risk of relying on it. 

Commercial car insurance will cover it all, including coverage for medical and legal expenses for employees authorized to drive the vehicle and extending protection on the very tools you need for your job in case of a break-in.

You need to be aware that if you ask an employee to drive your personal vehicle for a work matter, and there is an accident, whether they are at fault or not, a claim may be denied on either of your policies. 

This is because personal auto insurance won’t always cover the vehicle being used for work, and commercial auto insurance won’t cover it, as the employee is technically not insured on a personal vehicle.

Coverage Limits

Another big difference is how much you will be covered in the event of a claim. As a business owner, you have more to consider in terms of coverage, as there are more things that could need protecting.

For personal vehicles, the coverage will extend to the vehicle and persons involved. This means that your coverage for certain claims could be between $10,000 to $20,000 per accident, and may be capped between $300,000 to $500,000 depending on what is being claimed.

For commercial vehicles, as you are looking to protect and insure yourself, employees, property, and third parties (regardless if you are at fault or not), then your coverage is higher. This is designed to insure medical and legal expenses, and the coverage may start at $500,000 and increase to $2 million or more.

Personal premiums and deductibles will be lower because even though the coverage is important, it doesn’t cover the same things. Commercial premiums can still fit in your budget as long as you have the right level of coverage you need for your business.

The Difference Is Everything

Making sure you have the right coverage on the right vehicle is essential in the event of a claim. This saves you time and money when you really don’t have either to spare, especially from a business standpoint. 

For all your coverage needs, you can reach out to our personal auto insurance agency in Oshawa. We can walk you through your needs and help you determine if it’s time to change to commercial auto insurance or if your personal coverage will, in fact, be enough. 

W.B. White Insurance is in the unique position of being family owned and operated. More importantly, we are an independently owned car insurance provider, meaning that your interests are our interests, and not dictated to by outside parties. 

This allows us to make sure that you are getting the policy you need, not the policy someone else feels you need. We will explain everything about insurance policies, and help you understand what’s important for your personal life or business requirements.

Remember, vehicle insurance is mandatory regardless of the situation, so you need to understand exactly what type of coverage you receive. So, reach out and speak to our friendly experts today. You can contact us online for a quote or call us at 1-877-420-4572.