Coverage differs for personal, business and commercial auto insurance. Essentially, it would be best if you had separate policies for each of these types of insurance. Entrepreneurs launching startups particularly need to know the difference between commercial, business and personal auto insurance. Knowing your liabilities and insurance protection is crucial to business success. Here’s a comparison of personal, business and commercial car insurance plans.
Similarities in Basic Coverage
Basic insurance plans for business, commercial and liability are similar in the sense the more coverage you need, the more you pay in premiums. The number of drivers is also a factor in each of these plans. A company with a large fleet of trucks will pay higher insurance rates than a small firm with minimal vehicles. Each plan has limited coverage, as none can act as umbrella coverage for all potential claims.
The auto insurance plans you need will largely depend on how the vehicles’ usage, such as commuting or transporting items from one location to another. Personal auto insurance is the simplest cover because it often covers just one person and isn’t work-related. Business and commercial auto insurance might involve multiple drivers assigned to the same vehicle.
Business vs. Commercial Insurance
The most evident difference between business insurance and commercial auto policies involves how work-related vehicles are used are used. Business auto insurance covers vehicles used for trips through regular traffic, whereas commercial auto insurance covers specialized vehicles designed for specific jobs. An 18-wheeler that delivers products to warehouses from city to city needs commercial insurance. By contrast, a courier who delivers documents across town may be covered by a business insurance policy.
Business owners need to know to know the difference between business and commercial insurance because having the wrong insurance can lead to heavy litigation. Both of these types of insurance are more expensive than a personal auto plan. Does a sole proprietor need a personal or business plan? It depends on the degree to which it’s used for work.
Commercial auto insurance usually costs more than business insurance, since commercial vehicles pose higher risks. One of the reasons a commercial vehicle presents a higher risk is the more frequent use of the vehicle. The more mileage traveled by a vehicle, the more the odds of an accident increase, driving up the insurance rate.
Drivers of large trucks or buses have less ability to respond to sudden road or traffic changes than motorists in compact cars. Any heavy-duty vehicle used for construction has a greater risk of causing damage than a small car used for commuting. The greater the risk, the higher the insurance rates will be.
The use of multiple drivers for a certain vehicle raises the question as to whether it should be covered by a business, commercial or personal auto insurance policy. While a personal policy may automatically cover whoever drives the vehicle, business and commercial policies often only cover specific drivers. But it depends on the insurance company since some policies might cover all company drivers, while others only cover specific names.
Every business using vehicles must be compliant with its local and state laws regarding insurance. That makes it crucial for business owners to know the differences between commercial, business and personal auto insurance. To learn more about various types of insurance, contact the experts at Weaver & Associates today.