Personal auto insurance is the most common type of auto insurance that every driver operating a personal vehicle carries. This insurance is required by the state for normal drivers.
Commercial auto insurance, on the other hand, is an auto insurance policy that only applies to vehicles used for work purposes, such as transporting equipment. It provides a lot of the same coverages as a personal auto insurance policy but is geared specifically for work vehicles.
What Does Personal Auto Insurance Cover?
A full coverage car insurance policy generally comes with:
Comprehensive coverage provides compensation for loss of or damage to the vehicle due to fire, wind, hail, falling objects, lightning, theft, vandalism and other incidents not including collision.
Collision coverage provides compensation for loss of or damage to the vehicle due to collision with another vehicle or object.
Liability covers bodily injury and property damage the insured driver may cause while operating the vehicle.
Medical payments cover medical expenses for the driver and their passengers after an accident.
Uninsured/underinsured motorist covers expenses related to an accident involving a driver not carrying insurance.
Roadside assistance helps with trip interruption incidents such as running out of gas, changing a tire and towing.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance provides the same coverages as listed above, though the limits on these coverages are often higher for commercial vehicles. There are also additional coverages available for commercial auto insurance policies to cover equipment being transferred. This is called inland marine insurance.
It may also include:
Which Auto Insurance Policy Do I Need?
So, how do you know which policy you need?
It’s important to note that commercial auto insurance does cover personal use, as well. It’s unlikely that you will need to insure your vehicle with both commercial auto insurance and personal auto insurance.
Since commercial auto insurance is geared toward commercial vehicles, you should not use this insurance on a personal vehicle that is not used for work. Doing so can result in the insurance agency cancelling your policy.
But how do you know if your vehicle is used for work purposes?
Commuting to and from work does not count as work purposes. If this is the only work-related use of your vehicle, you will need personal auto insurance rather than commercial. On the other hand, if you frequently transport cargo and equipment or use the vehicle to frequently transport clients, you will need commercial auto insurance.
If you are in doubt about the type of policy you need, speak with an insurance agent.