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Having either personal auto insurance or commercial auto insurance is a must whether you’re behind the wheel of your own vehicle or one that you drive for work. Accidents can be exorbitantly expensive, especially if you’re at fault. Getting an auto insurance policy before an incident happens can help pay for the resulting expenses. But which policy do you need?
There are a few key differences between personal and commercial auto insurance, so it’s important that you select the right policy — especially if you’re a business owner. Here’s the main difference in coverage: Personal auto insurance only covers personal vehicles that you drive for personal reasons, while commercial insurance covers any vehicles that you use for work.
When do you need personal or commercial auto insurance?
How you use your car determines the difference between a commercial vehicle and a personal vehicle. If you use your vehicle for any type of work, even if only occasionally, you may need to purchase additional coverage in the form of commercial insurance on your personal vehicle.
Furthermore, depending on how you use your vehicle, you may need commercial auto insurance, personal auto insurance, hired and non-owned auto insurance (HNOA), or some combination of the three. Keep these options in your rear-view mirror.
Commercial auto insurance
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. Commercial auto insurance 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 pay settlements and damages.
- Comprehensive – If something besides an accident damages your insured vehicle, the commercial automobile policy can respond by paying for repairs.
- Collision – If your insured vehicle is damaged when you’re in an accident, the commercial auto policy can respond by paying for repairs.
- Uninsured motorist – If you’re in an accident caused by another driver, uninsured motorist coverage can help pay for the damages if that driver was uninsured or underinsured.
Every state in the country has a different minimum policy limit for commercial auto coverage. You should be sure to check your state laws to ensure that you have the necessary commercial coverage.
If you use your personal vehicle for work purposes, you’ll 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 your personal vehicle is in an accident while you’re operating it for work purposes. If your personal auto policy does not cover your business use, you’ll need to purchase a commercial auto policy to cover the times when you use your vehicle for business.
Personal auto insurance
Do you have a car you use for personal reasons? Driving while uninsured isn’t only risky, it’s against the law. All states legally require private passenger car owners to have a personal auto policy in order to register their vehicle and to drive it. Laws and minimum coverages of a personal policy vary, but the vast majority of drivers are obligated to have these types of coverage:
- Bodily injury liability – Covers the costs associated with injury or death caused by your vehicle (whether or not you are the driver at the time of an accident.)
- 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 may want to add optional coverages to your policy, 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.
Hired and non-owned auto insurance (HNOA)
In some cases, you may need to purchase commercial auto insurance that covers your use of hired and non-owned autos (HNOA). Instead of covering vehicles that you own, this coverage applies to vehicles that you rent, borrow, or hire for your business operations. These coverages are broken down into the following categories:
- Hired auto insurance – Covers only those autos you lease, hire, rent, or borrow. But it does not include any auto you lease, hire, rent, or borrow from any of your employees, partners, or members of their households.
- Non-owned auto insurance – Covers 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. It also covers bodily injury and property damage.
How much do commercial auto and personal auto insurance policies cost?
In general, commercial auto insurance premiums are more expensive than personal auto insurance premiums. This is because commercial car insurance may provide more coverage in the event of an accident. Commercial car insurance policies may also cover more vehicles than a typical personal car insurance policy, which can add to the cost.
Your business’s safety belt
Getting vehicle insurance is a small upfront investment that shields you against the consequences of an accident. At Thimble, our mission is to make sure you know exactly what kind of insurance coverage you need and how to get it.
Our Business Owners Policy (BOP), which combines general liability insurance, commercial property insurance and business interruption insurance, also includes optional add-on HNOA coverage for vehicles that you hire, lease, rent or borrow for your business.
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. It’s quick, easy and gives you the green light to grow your business.