WEDNESDAY, APRIL 29, 2020
Auto insurance can be a complicated topic when business gets involved. If you operate a business from home or use a company vehicle for personal purposes, your personal auto insurance policy may not be adequate.
Difference Between Personal Auto Insurance and Commercial Auto Insurance
A personal auto insurance policy only covers personal use while commercial auto insurance covers vehicles owned, leased, rented or used by a business. Both policies generally contain:
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Comprehensive Coverage: This coverage provides compensation if the vehicle is damaged due to fire, wind, hail, theft, vandalism or other incident not involving collision.
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Collision Coverage: Collision coverage covers damage to the vehicle due to a collision with another vehicle or object.
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Personal Injury Protection: Personal injury protection (PIP) covers medical expenses for the driver and their passengers after an accident.
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Uninsured/Underinsured Motorist Coverage: Uninsured/underinsured motorist coverage provides compensation for damages that occur as a result of a crash with a driver not carrying insurance.
Be careful about what is considered work purposes and personal purposes. If you use a personal vehicle to commute to and from work, your personal auto insurance policy should provide coverage if an accident occurs. If you frequently make trips, transport products or take clients out to lunch, however, you may need commercial auto insurance.
If you run a business from home and consistently use your vehicle to travel or transport items for work, you should consider commercial auto insurance.
Do Employers Cover Commercial Auto Insurance?
In some rare cases, employers may cover the cost of commercial auto insurance. This is typically when the vehicles are owned by the company. For example, if you are a delivery driver and use the company’s vehicles for transporting produce, that vehicle (and by extension, you) will be covered under your employer’s commercial auto insurance policy. Be sure to ask your employer about their policy coverage before driving.
If you’re using a personal vehicle for work, there is a chance that your employer won’t cover the cost of commercial auto insurance, though there may be compensation for gas. This is another case where you need to speak with your employer about the details of their insurance.
Does Commercial Auto Insurance Cover Personal Use?
While personal auto insurance doesn’t cover business use, commercial auto insurance typically does cover personal use. You likely won’t need two policies for one vehicle. Also be careful about insuring a personal vehicle with a commercial auto insurance policy. If an insurance company discovers that a personal vehicle that is not being used for business has commercial auto insurance, that insurance company may drop the policyholder for lying.
Carefully calculate how much you use the vehicle for personal purposes versus commercial purposes.
Is Commercial Auto Insurance Cheaper than Personal Auto Insurance?
The cost of auto insurance varies depending on a variety of factors. For business insurance, premiums are calculated depending on the size of the business, weight of the vehicle and cargo. Both policies also consider:
On average, commercial auto insurance can cost anywhere between $900 to $1,200 per vehicle a year while personal auto insurance costs an average of $1,758 a year.
Auto Insurance Requirements for Work Vehicles
It’s also important to keep in mind that commercial vehicles have different auto insurance requirements than personal vehicles. Work vehicles that transport people or other cargo may need different limits of liability insurance than personal insurance.
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