Does Personal Auto Insurance Cover Business Use?

You’re running late for a meeting with a client. You hop in your car and speed off, hoping to beat the traffic.

But as you turn a corner, you hear a loud crash. You’ve just hit another car.

You exchange information with the other driver and call your insurance company.

But then you realize something: you were using your car for business purposes. Does your personal auto insurance cover that?

If you’re not sure, you’re not alone. Many people don’t know the difference between personal and business/commercial auto insurance, or when they need one or the other.

In this article, we’ll explain what personal and commercial auto insurance covers, and how to choose the right policy for your needs.

An image of does personal auto insurance cover business use
Does personal auto insurance cover business use?
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What is Personal Auto Insurance?

Personal auto insurance is a type of insurance that only covers accidents that happen when using your vehicle for personal reasons.

This means driving to and from work and traveling for non-work purposes.

Usually, the policy insures the vehicle owner and one or two family members.

Does Personal Auto Insurance Cover Business Use?

The answer is NO. Most personal auto policies explicitly don’t cover business use.

This means, if an accident occurs while driving for work purposes, your insurance claim may be denied.

Its important to note that your personal insurance won’t pay a claim if you get into an accident while driving your personal car for business purposes.

Occasionally, personal auto insurance may offer some limited coverage for business use, so it’s essential to check with your insurance provider to understand the specific coverage details.

You may need to add commercial auto insurance or hired and non-owned auto insurance to your personal policy to cover business use of your car.

What is Commercial Auto Insurance?

Commercial auto insurance is a type of insurance that covers vehicles used for business purposes.

This includes company cars, commercial trucks and vans, and other vehicles like box trucks and food trucks.

It can pay for damages and injuries caused by you or your employees in an accident, as well as theft, vandalism, or other problems with your business vehicles.

Here are situations where you actually need a commercial auto insurance:

  • The vehicle is exclusively used for work and is designated as a company car.
  • The company is the owner of the truck or van.
  • You provide business services using your vehicle.
  • Tools or equipment are transported in a business vehicle.
  • There is a requirement for elevated liability insurance limits.
  • Transportation of goods or individuals is part of your job using a car, van, or truck.
  • Your employees operate a vehicle owned by the business.

Additionally, its important to note that if your business owns a vehicle, it must be covered by commercial auto insurance.

What are the coverages included in a commercial auto insurance policy?

Commercial auto insurance is essential for businesses that use vehicles for their operations, such as delivery services, contractors, or companies with a fleet of vehicles.

It helps lower the financial risks of accidents or other issues with business-owned vehicles.

Businesses should work with insurance providers to adjust their coverage to their needs.

Below are some of the coverages offered by commercial auto insurance:

  1. Liability Coverage: Like personal auto insurance, commercial auto insurance includes liability coverage to protect against bodily injury or property damage claims for which the business is responsible.
  2. Collision Coverage: This covers the cost of repairs to a commercial vehicle involved in an accident, regardless of fault.
  3. Comprehensive Coverage: This coverage extends to non-collision incidents, such as theft, vandalism, or natural disasters.
  4. Uninsured/Underinsured Motorist Coverage: Protects the business if involved in an accident with a driver who doesn’t have insurance or has inadequate coverage.
  5. Hired and Non-Owned Auto Coverage: This extension covers vehicles not owned by the business but used for company purposes, like employee-owned cars used for business.
  6. Cargo Coverage: For businesses involved in transporting goods, this coverage protects the cargo being transported.

What’s the difference in prices between Commercial Auto Insurance and Personal Auto Insurance?

Typically, commercial auto insurance is more expensive than personal auto insurance.

This is because commercial policies usually come with higher limits, providing increased coverage in case of an accident.

While a personal auto policy generally insures an individual driving their own car, a commercial policy provides coverage for an entire business.

This may include multiple drivers, numerous vehicles, trucks, and employees, even those with less-than-ideal driving records.

The average cost of commercial auto insurance for small businesses is about $1704 per year, while the average cost of personal auto insurance is about $1592 per year.

However, the exact cost of both types of insurance depends on various factors the car’s make and model, the driver’s history, and the policy’s coverage and deductible.

Nevertheless, the cost of commercial auto insurance varies depending on the details of your business.

A small business with a limited number of drivers using company vehicles is likely to have a more affordable premium compared to a large business managing a fleet of vehicles with multiple drivers.

Factors Influencing the cost of Commercial Auto Insurance

  • Industry-related risks
  • Vehicle types in possession
  • Quantity of vehicles
  • Frequency of vehicle usage
  • Driving records of employees
  • Chosen coverage type
  • Selected policy limits
  • History of auto insurance claims


As discussed above, personal auto insurance does not cover business use of your vehicle in most cases.

If you use your vehicle for work purposes, you need to have commercial auto insurance to protect yourself and your business from the financial risks of accidents or other incidents.

Commercial auto insurance covers higher liability limits, more types of vehicles, and more complex legal issues than personal auto insurance.

Moreover, it helps you comply with the laws and regulations that apply to your business.

To find the best commercial auto insurance policy for your needs, you should assess your specific vehicle usage, compare quotes from different insurance providers, and work with an insurance agent to tailor your coverage accordingly.

By doing so, you can ensure that you have the right insurance for your business vehicle and avoid any unpleasant surprises in the future.

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