You might think that personal car insurance is for regular drivers and commercial car insurance is for all businesses, but not so fast. There are some cases when a business owner might want to use a personal car insurance policy and cases when only a commercial policy will work. This is why you must understand the distinctions between the two so you can get the best deal and the best coverage. Let’s take a close look at the differences between commercial and personal car insurance and how to pick the right one for you.
Commercial Car Insurance
The biggest difference between commercial car insurance and personal car insurance is the owner of the vehicle. If the vehicle is under the business’s name, you should get commercial insurance. The goal of commercial insurance is to protect you and your employees in case they are involved in an accident while using the vehicle for business purposes. There is also a difference in the amount of coverage you get with both. With commercial car insurance, you will usually be covered for different types of vehicles, higher claims, and certain legal issues you wouldn’t be covered for with personal insurance.
Commercial insurance can often allow multiple employees to use your company’s vehicles. As well as this, sole proprietors can benefit from getting commercial insurance if they use their vehicles primarily for business.
Commercial car insurance will provide coverage whether you want to transport goods and equipment, go to visit clients, perform services, or tow a trailer for business using your vehicle. It will also cover you if you want to charge a fee to drive people or transport goods for them. You will need commercial car insurance if you want to rent your vehicle out as well.
Personal Car Insurance
Personal car insurance will cover the policyholder to drive the vehicle for ‘social, domestic and pleasure’, although it is also possible to add ‘commuting’ and ‘business use’ as additional classes of use.
Because cars that are predominantly used for social, domestic and pleasure journeys tend to clock up fewer miles than company cars personal car insurance is usually less expensive than commercial car insurance. You can get even better deals if you decide to look around and compare car insurance policies. When shopping around, just ensure that you aren’t compromising on quality and be sure to get a policy that provides the coverage you need.
Hired and Non-Owned Car Insurance
There is another type of insurance that you might want to look at that is less common, and that is hired and non-owned car insurance. This will provide liability coverage when your employees are using their vehicles for business purposes. It will also provide coverage if you routinely hire vehicles. This works for leased vehicles as well. Why should someone use this type of insurance? Because there’s a gap in commercial car insurance that excludes vehicles that are not titled to the company. This type of policy can bridge that gap.
However, there are many things that this type of insurance will not cover, and you must know what those are first. For example, it won’t cover the costs to repair the employee’s vehicle or a rented/leased vehicle, so you could be left with a hefty bill if anything happens. It will not cover incidents when your employees are going to and from work or when they’re running personal errands during their workday either.
What Happens if You Use a Personal Car Insurance Policy to Conduct Business?
A lot of people may think that they can get away with doing business using an insurance policy that only has the ‘social, domestic and pleasure’ class of use, but this is a big risk to take. If you were ever involved in an accident whilst on a business trip you could find that your insurance is invalidated, when means you’d be on the hook for any costs yourself and will also find it much harder to find a new policy.
Now that you know more about the differences between insurance types, you should be able to find the right one for your business. This is something that you’ll need to be very careful with if you don’t want to expose yourself and your employees to unnecessary risk.