By Hannah Fillmore-Patrick, Insureon Contributors
For small businesses, the line between what is considered a personal vehicle and a commercial vehicle is often blurred. Sometimes small business owners and employees use their personal vehicles to transport employees, move equipment or deliver goods. So should these multifunction vehicles be covered by personal or commercial car insurance?
To find out, check the difference between these two types of car insurance.
Personal against commercial car insurance
The main difference between personal and commercial car insurance is the type of debt that the policy covers. While both policies pay for car repairs and medical bills after an accident, commercial car insurance usually covers higher claims, different types of vehicles, and more complex legal issues than personal car insurance.
Commercial car insurance
Commercial car insurance covers accidents that occur when you or your employees use a vehicle for business purposes, including the transportation of goods, materials, employees or customers. A commercial policy usually insures all company employees as additional insured, which means that every employee with a valid license can use the vehicle.
If you regularly use a vehicle to perform any of the following tasks, commercial insurance is probably the right choice for you:
- Transportation goods or equipment
- Operating Clients or Employees
- Perform a Service for which You Are Paid [1
- Load people a fee to transport goods in your vehicle
- Get heavy work-related loads
- Draw a trailer used for business
A commercial policy usually has higher limitations of liability than personal car insurance. It also provides protection against additional legal challenges that the victim can face against your business or employees as a result of an accident.
If your company often uses vehicles that it does not own for business purposes, a hired, non-owned policy is also an option to consider.
Personal car insurance
Personal car insurance covers only accidents that occur when you use your vehicle for personal reasons, including commuting to and from work and travel that is not related to your duties. The policy usually insures the vehicle owner and one or two closest family members.
In limited cases, liability insurance from personal car insurance is sufficient for one-man holders. If you sometimes use your personal vehicle for business purposes, your insurer may rarely change your personal insurance policy to include certain business uses.
Business use of passenger car insurance is usually cheaper than commercial car insurance. These modified policies are intended for people who use their vehicles to work for ridesharing, winter plowing or equivalent part-time or seasonal work.
Commercial Vehicle Insurance Requirements for Heavy Vehicles
In an accident, heavy vehicles cause more damage than light vehicles. Since the potential debts are much higher, vehicles weighing more than five tons or more than one ton require a special insurance. These heavy vehicles include minibuses, cement mixers, semi-trailers and trailers.
If your business owns or operates heavy vehicles, you probably need to purchase commercial car insurance or leased non-owned car insurance with a liability limit high enough to cover damages from potential accidents.
Insuron has helped thousands of companies find commercial car insurance. Read more and compare quotes from the best American carriers.