Is My Work-Related Vehicle Personal or Commercial?

work-related vehicle personal commercial car

Frank lost everything, because of a pepperoni pizza.

Frank was ecstatic to get the delivery driver job at his favorite pizzeria. Unable to pay the commercial auto insurance cost, he decided to keep his current coverage, at least until he got paid.

Yet, while Frank was making his first delivery, there was a major car accident, and the police found him to be at fault. Since he was working, his personal auto insurance policy wouldn’t pay for a single thing. Frank was on the hook for hundreds of thousands of dollars of his own medical bills, as well as the other drivers. 

Every year, there are 60 million accidents in the United States, and at least 72% of them involve property damages. Along with property damages, accidents can cause astronomical medical bills and lawsuit possibilities.

If you don’t have the right coverages, you could wind up having to financial consequences that last a lifetime. Read on to find out what type of insurance policy you need to stay safe.


Commercial Auto Insurance

To understand commercial auto insurance costs, you have to understand when commercial coverages apply. A commercial auto insurance policy will cover accidents and damages that occur while the vehicle’s in use for business reasons. Whenever you decide to use a work vehicle for personal reasons, the commercial coverage doesn’t apply.

A typical commercial auto insurance policy will cover you and all of your employees who have access to the vehicle. If the vehicle's transporting materials, employees, or clients, commercial coverage applies.

It’s always a good idea to get a commercial policy that covers your employees as additional insured parties. Ensuring employees as “additional insured parties”, gives you more flexibility over who can use the vehicle.

Rather than only having a set list of drivers that your policy will cover when you can have everyone covered. Every employee that has a valid license will be able to use your vehicle, without violating any of the policy’s terms.


Coverages for Commercial Policies

So far, we’ve been talking about when you might need commercial coverages. Yet, you should also familiarize yourself with the type of things commercial policies will pay out for. Here are standard commercial coverages:

  • Property damage
  • Liability for bodily injury
  • Collision coverage no matter who’s at fault
  • Comprehensive coverage
  • Medical payments
  • Uninsured motorist
  • Non-owned auto coverage
  • Loading and unloading liability

The coverages above are standard, yet each policy will have different ones. It’s always a good idea to shop around when purchasing any type of insurance policy. Coverages, terms, and prices, vary greatly from one insurance company to the next.


Personal Auto Insurance

A personal auto insurance policy will cover things you do in your car that aren’t work-related. This includes going to and from work, all nonwork-related travel, theft, and more. Here are the coverages a personal auto insurance policy can provide:

  • Bodily Injury Liability
  • Property Damage
  • Personal Injury Protection
  • Uninsured Motorist
  • Comprehensive
  • Collision
  • Towing
  • Rental Reimbursement

Commercial coverages are similar to personal auto insurances, the limits and wording however are different. To better understand both types of policies, you should learn what the basic types of coverages can provide.

Bodily injury liability and property damage, are the coverages that will help pay for the other vehicle’s damages if you cause an accident. The personal injury protection, or PIP, is a basic coverage. Since PIP, won’t enough to cover major medical expenses, you might need a personal injury attorney, if you have serious injuries.

Next, we have uninsured or underinsured motorist coverages. In the event another driver causes you to get hurt in an accident, and they don’t have insurance coverage, you’ll still have protection.

Uninsured motorist coverage is so important, there are laws, making it illegal to not offer the coverage in certain states. Comprehensive and collision coverages will pay for damage that occurs to your car. This includes damage that occurs from things like storms, or wild animals.


Personal vs Commercial Auto Insurance Cost

Usually, the cost for commercial auto insurance will be higher, than the cost of personal auto insurance. Yet your commercial auto insurance cost can be lower than a personal policy if you have exceptionally low coverage limits.

You probably need a commercial policy, if you are using your vehicle regularly to perform any of the following tasks:

  • Tow a business trailer
  • Transport heavy loads for a fee
  • Move goods
  • Drive clients places
  • Drive employees places
  • Allow employees to use the vehicle for work
  • Charge a fee for others to ride in your vehicle
  • Charge a fee to move goods with your car

The reason commercial auto insurance costs more is that the coverage limits are usually higher. A commercial policy will usually have higher liability limits. In addition to providing more liability coverage, you'll also have access to certain legal coverages.

If you want to keep your finances, and your company’s finances safe, you’ll need to make sure you have the right type of policy. If an injured party decides to file against your business, you could be facing major financial burdens. Even if you’re just letting an employee borrow your vehicle for work use, and they cause an accident, your entire company is on the line.


Know Your Coverages

Your commercial auto insurance cost each term, will change as rates in your area change. Typically, most business owners, don’t take the time to review their coverages, until their rates go up. Only then, do they begin to look at their policy, to make sure they aren’t overpaying for any coverage they don’t need.

Instead of waiting to find out what you’re paying for, make sure you fully understand whatever type of auto insurance policy you currently have. Contact your insurance company, and ask them to walk you through each coverage you have, and what it’s costing you.

While you are reviewing your coverage, you can also dig deeper into finding out whether or not you need a commercial or personal auto policy. When it comes to insuring yourself and your company, the more you know, the safer you are. Protect what’s yours by checking out our Insurance section to learn more today!

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