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How Is Business Auto Insurance Different from Personal Auto Insurance?

    4 minute read

    The biggest difference between Business Auto Insurance and Personal Auto Insurance is obvious: one is for vehicles used commercially and the other is used personally. In some cases, a Personal Auto Insurance policy may provide coverage during business use. However, it’s helpful to recognize how differences in coverage will protect you (or not) if you file a claim.

    What They Have in Common

    To begin, it’s important to know what the Auto Insurance requirements are in your state. In general, the following coverage options are typical in both Business and Personal Auto Insurance policies. However, keep in mind that the limits on what’s covered will vary depending on what kind of policy you have—business or personal.

    • Bodily Injury Liability: Designed for instances where you (the insured) are responsible for injuries to another person due to an accident. This may include sickness, disease, pain and suffering, emotional distress, loss of income, and even death.
    • Property Damage Liability: Coverage that may pay for damage or destruction of a third party’s property, including loss of use.
    • Collision: A collision is an insurance term for what most people think of as an “accident.” This coverage pays for damages to your car as a result of an impact with another vehicle, object, or person. Also, it’s often subject to a deductible, which is the amount the insured is responsible for paying (similar to a copay for a doctor’s appointment).
    • Comprehensive: This type of coverage may pay to repair or replace your car for accidental damage other than that caused by a collision. For example, you hit a signpost, your vehicle is damaged in a storm, stolen, or vandalized. Comprehensive coverage also typically includes a deductible.
    • Uninsured/Underinsured: If a driver that is not insured is responsible for an accident, this coverage may pay for the insured’s injuries. It may also cover the bodily injury expenses of the insured’s passengers. It’s an inexpensive coverage that protects you from having to pay out-of-pocket when another driver’s insurance situation isn’t adequate.

    How They Differ

    Because the needs of a business are different from those of an individual, the coverage offered in a business policy will be different. Business Auto Insurance provides additional coverage that a standard personal auto policy cannot. Even other drivers and vehicles not owned by your business may be covered in work-related incidents. In addition, tools, equipment, and cargo may be covered through a business policy. Here are the coverages a business policy may have that a personal one won’t:

    • Additional Insured Certificates: The added insured party can be anyone that seeks to be protected in the case of an accident, whether or not they drive the vehicle. Such can be the case with companies, affiliates, or any party with a financial interest in your operations.
    • Cargo Coverage: Reimburses you for the amount set by your policy in the case you suffer a loss while transporting equipment or other cargo. 
    • Hired Auto: Extends coverage onto a vehicle that you or your employee rent (“hire”) for work purposes. Example: Your employee has an out-of-state trip and you want to extend coverage onto the rental car.
    • Non-Owned Vehicle Coverages: This is a collection of coverages that extends your Business Auto Insurance to protect you and your employees when driving a vehicle that your company does not own.
    • Rental Reimbursement and Downtime Coverage: In the case that you can’t find a temporary vehicle to continue working after a covered incident, this type of coverage pays you an established amount to offset the resulting loss of income.

    Are Semi-Trucks Covered in A Business Auto Policy?

    While semi-trucks or truck tractors are used for business, they require their own policy. Trucking businesses must obtain Tractor Truck Liability through a Commercial Truck Insurance policy. After all, the risks and potential liabilities of a commercial truck are very different from other vehicles. Therefore, most companies tend to carry more wide-ranging coverages.

    Examples of business vehicles typically insured through a Commercial Truck policy:

    • Box trucks
    • Cargo vans
    • Cement mixers
    • Dump trucks
    • Flatbed trucks
    • Food trucks
    • Pump trucks
    • Refrigerated trucks
    • Semi-trucks/truck tractor
    • Street sweepers
    • Tow trucks
    • Utility trucks

    What Factors Affect Coverage and Price for Business Auto Insurance?

    Because the risk associated with business vehicles is often different, Business Auto Insurance policies can be more involved. The factors that will affect a policy are:

    • The number of vehicles insured
    • The type/class of vehicles insured
    • The amount of time the vehicles are on the road
    • What they are used for
    • The number of drivers on the policy
    • The driving history of the drivers on the policy

    Similar to Personal Auto Insurance, Business Auto Insurance rates can go up if you or your employees get into accidents when driving company vehicles. When hiring or assigning drivers, it’s important to look into their driving records and to provide proper training.

    It’s also necessary for businesses to ensure that all drivers are added to their insurance policy and have the correct licenses for operating commercial vehicles. Failure to do so may result in loss of coverage.

    How to Find the Right Business Auto Policy?

    You never want to risk your business’s reputation and financial security with questionable insurance companies or agents. To find the best coverage for your vehicles, you can research and contact credible insurance companies that offer the coverages you need. You’ll also want to consider accessibility to customer service, ease of payments and renewals, etc.

    Leveraging licensed Business Insurance professionals, like the ones at AIS Insurance, can be a valuable resource for comparing coverages from multiple companies at once. An added benefit to this comparison-shopping approach is that your policy can be re-shopped if premiums fluctuate or business needs evolve. It’s great to have such a valuable resource for your Business Insurance needs. Speak with one of our Commercial Insurance Specialists today at (855) 919-4247 for a quick and easy free quote.

    This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms, and coverage in a given policy may be different from those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.