Commercial auto insurance vs. personal

If you’re self-employed or a small business owner, you know that keeping your business moving means more than just hard work — it means protecting everything you’ve built, including the vehicles that help you get the job done. Whether you’re driving to meet clients, delivering goods, or transporting supplies, it’s important to know you have the right auto insurance in place.

You might think your personal auto insurance will protect you from the unexpected, but before you head out on your next entrepreneurial endeavor, take a moment to consider if commercial auto insurance needs to come along for the ride.

Why commercial auto insurance matters

Commercial auto insurance (also known as business auto insurance) offers protection for vehicles used specifically for business — whether it’s a company-dedicated vehicle or your personal car used for work. Unlike personal auto policies, commercial auto insurance is designed to address the higher risks and unique situations that come with running a business. It can be customized to your business’s needs and provides protection from costs associated with property damage, injury, and liability claims.

On the other hand, personal auto insurance is written for individuals and families, protecting your personal assets if you’re in an accident. However, it may exclude certain business uses of a vehicle. That’s a key reason why you’ll need commercial auto insurance for your business’s vehicles.

What’s the difference between commercial and personal auto insurance?

As you now know, the main difference is coverage — personal auto policies protect you, your personal assets, and your family while commercial auto insurance helps protect you and your business from auto-related lawsuits, settlements, and higher liability risks.

Another important distinction is vehicle ownership. If your vehicles are owned by your business, they need to be covered under a commercial auto policy. This helps protect your business’s finances from costs related to accidents or other covered losses.

Do I need commercial auto insurance?

How do you know when you need commercial auto insurance for your vehicle? Here are some key questions to consider:

How is the vehicle used?

If you own a business, have a business owner policy or general liability policy for your business, and use the vehicle to convey goods, services, or supplies, you’ll most likely need a commercial auto policy.

Who drives the vehicle?

If employees not listed on your personal policy drive your business’s vehicles regularly, or if non-listed drivers use their own vehicles for your business, you’ll typically need commercial auto insurance.

How is the vehicle equipped?

Vehicles with ladder racks, catering equipment, snowplows (not used for personal snowplowing), or other business-related modifications should be covered by a commercial policy.

What type of vehicle is it?

Lots of vehicle types need commercial coverage — from personal vehicles used for business purposes to pickups and dump trucks, and from semis and commercial trailers to vans or utility vehicles with a gross weight over 15,000 pounds. Vehicles with altered suspensions or hydraulic lifts often require a commercial auto policy as well.

The bottom line? If you’re using your vehicle to benefit your business, make it your business to protect yourself and everything you’ve worked for.

How much does commercial auto insurance cost?

The cost of commercial auto insurance depends on several factors, such as the number of vehicles you have to insure and the amount of coverage you need. Other factors to consider include:

• Cost (new or MSRP) and type/body style of the vehicle
• Your industry and how the vehicle is used
• Where you drive and garage the vehicle
• Policy limits and deductibles

It’s also important to factor in risk. An insurance company is going to look at the driving records and claims history of those behind the wheel of your commercial vehicle. High-risk drivers and a history of claims can increase your premium or cause certain drivers to be excluded from coverage.

Can I write off my commercial auto insurance?

If your vehicle is used for business purposes, commercial auto insurance may be tax deductible. You can typically deduct vehicle-related costs as long as you can prove business use. Be sure to consult your trusted tax advisor or accountant for guidance specific to your situation.

Get the coverage your business needs

Whether you’re a one-person operation or an expanding business, understanding where your company needs coverage will ensure success in the long run. Connect with an American Family Insurance agent today to find the right coverage for your personal vehicle or business vehicle today.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation. This article does not afford, offer, or guarantee any coverage.

This article may include information that represents a brief description of coverages, but this is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.