Personal vs. commercial auto:
Which one do you need?

Driving cars is risky. Whether you’re doing it for personal use or commercial purposes, accidents can happen. If they do, they can be exorbitantly expensive, especially if you’re at-fault.

This is why individuals and businesses get insurance policies to protect them from the inherent risks of operating a motor vehicle.

Not all policies are the same, however. For instance, there are significant differences between personal and commercial auto insurance. You may need both, particularly if you’re a small business owner who owns or leases a company vehicle.

But what are the differences between personal vs commercial auto insurance? Let’s review.

What is personal auto insurance?

Do you have a car you use for personal reasons? All private passenger car owners are legally required by their state to have a personal auto policy in order to register the vehicle and to drive it. Laws and minimum coverages of a personal policy vary, but the vast majority of drivers are obligated to carry:

  • Bodily injury liability – Covers the costs associated with injury or death that the driver causes.
  • Property damage liability – Covers third-party damages to another vehicle or personal property such as a building, fence, yard, etc.
  • Uninsured motorist coverage – Protects the driver if they’re in an accident caused by an uninsured motorist (or a hit-and-run).

Mandatory coverage helps to cover the costs for third-party vehicles in the case of an accident, but it doesn’t cover your vehicle or injury to you. For that, you’d need to have optional coverages such as:

  • Medical payments – Covers medical expenses for injuries to the driver and passengers, including lost wages and other related expenses.
  • Collision – Covers the damages to your personal car resulting from a collision with another vehicle or object when you’re at fault.
  • Comprehensive – Covers theft, vandalism, damage from animals, and other incidental damage (aside from collisions), including fire, rocks, hail, floods, and other hazards. 

Driving while uninsured isn’t only risky, it’s against the law.

What is commercial auto insurance coverage?

Does your small business own or lease work vehicles? Are those vehicles used to transport employees or clients, move between job sites, or transport equipment? If so, you’re legally required to have a commercial auto insurance policy. What does it cover? It protects cars, trucks, or work vans and can help pay for:

  • Injury and damage to third parties – Covers the injuries or damages to others or their property resulting from an accident when you’re at fault.
  • Medical expenses – If the driver or their passengers are hurt in an accident, it can help cover the medical bills.
  • Legal defense – Should your business get taken to court over a collision, it can provide a legal defense as well as settlements and damages.
  • Comprehensive – If the vehicle is damaged by something besides an accident, the commercial automobile policy would kick in.
  • Collision – Pays for damage to the company vehicle if you’re in an accident.
  • Uninsured motorist – Can help pay for the damages if a driver who caused the accident was uninsured or underinsured.

Every state in the country has a different minimum policy limit for commercial auto coverage. As such, be sure to check your state laws to ensure that you have the necessary commercial coverage.

But what if you use your personal vehicle for work purposes? For that, you need to check your personal auto policy to determine if the business use exclusion applies to your commercial operations. The vast majority of personal auto insurance policies won’t cover you if an accident happens in your personal vehicle happened while you’re doing work. If your personal auto policy does not cover your business use, you will have to purchase a commercial auto policy to cover the business use.

What is hired and non-owned auto insurance?

Some clients will therefore require that you carry some sort of commercial auto coverage to apply to your use of hired and non-owned autos(HNOA).

This coverage applies to vehicles not owned by you that are rented, borrowed, or hired, by you for your business operation. These coverages are broken down into the following categories:

Hired – Only those autos you lease, hire, rent or borrow, but do not include any auto you lease, hire, rent or borrow from any of your employees, partners, or members of their households (for less than six months).

Non-owned – Only those autos you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes autos owned by your employees, partners, or members of their households but only while used in your business.

What does it cover? Like general liability coverage, it provides a defense and covers:

  • Bodily injury
  • Property damage.

Personal auto vs. commercial auto vs. hired and non-owned

Whether it’s general and professional liability or auto insurance, every policy has specific purposes. As a result, some people may need to get all three types of insurance in order to cover their bases. That said, we can speak generally:

While driving your vehicle for personal uses (outside of work), you are required to protect your car with a personal auto insurance policy. And it may be wise to tack on additional coverage like collision and comprehensive.

If your business owns or leases a vehicle, you’re legally required to have a commercial auto policy. It would help cover the risks related to collisions or unexpected damages.

If your business rents or borrows non-owned vehicles for work purposes, you should get a hired and non-owned policy.

Getting vehicle insurance is a small upfront investment that shields you against the consequences of an accident.

Essential business insurance

At Thimble, our mission is to make sure you know exactly what kind of insurance coverage you need and how to get it.

This is why so many small businesses trust us to handle their general liability and professional liability insurance, the two most basic forms of business insurance, even before you get on the road. Our affordable policies are designed to work when you do: from an hour, to a week, to ongoing coverage with a monthly payment.

How do you get covered?

Just download the Thimble mobile app or click “Get a Quote,” answer a few questions, review the instant quote, purchase the policy, and your Certificate of Insurance (COI) will be sent to your email inbox. All of this can be done in less than 60 seconds.

Need to get a personal insurance policy for a last minute gig? Want to learn more about the various types of insurance? Then you’re in the right place.

The content on this page has been verified by
Terri Hitchcock, JD
Chief Insurance Officer, Thimble
Terri has 38 years of industry experience and knows a thing or two about insurance, so she reviewed and approved everything on this page.

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