The Difference Between Personal and Commercial Auto Insurance

The difference between personal and commercial auto insurance may sound obvious to the lay person – personal is when the car belongs to you, commercial is when the car belongs to a business. But the reality is that the line between these two types of auto insurance can be very gray, particularly for small business owners.

This gray area can make deciding on a car insurance very overwhelming when you own your own small business. Learning about the differences between personal and commercial auto can save you money and get you the coverage that best suits your needs.

Personal Auto Insurance

Personal auto insurance covers accidents that occur while you are using your car for personal business. It also allows additional family members to be included on the policy.

Personal auto insurance basically covers all reasons you could be driving your car (driving to and from work, going to the store, driving your kids to school). The one big exception with personal auto insurance is that it will not cover activities that are business related.  In fact, most personal auto insurance policies will deny claims on accidents that occur while running your business.

Personal auto insurance is less expensive than commercial because of its limitations in coverage. Some policies may allow you to add limited coverage for business use that would be beneficial to have if you are using your vehicle for multiple purposes. For example, as somewhat of an offshoot of commercial insurance, hired and non-owned auto insurance will cover accidents that occur while you, or an employee, use your personal car to run business errands. This should be considered if your car is not primarily used for business but is occasionally needed for brief trips.

Commercial Auto Insurance

As the sole proprietor of a business, who uses a vehicle primarily for work, you should probably consider commercial auto insurance. This also applies to any employees who use a vehicle to work for you. 

If your business involves transporting equipment or tools for the business, traveling between job locations, or transporting clients, commercial insurance would be appropriate.

As with personal insurance, commercial insurance will cover the legal and medical expenses related to an accident. However, commercial insurance’s coverage is generally more comprehensive with higher liability limits. Because of this expanded coverage, commercial insurance is more expensive than personal insurance.


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