Never buy personal car insurance if your circumstances demand commercial insurance (the reverse also applies). The two types of insurance policies are markedly different. Using the wrong type of car insurance exposes you to risks that the policy doesn't cover. Below are some of the major areas in which commercial and personal car insurance differ.
Coverage
Commercial car insurance covers business use of the car, while personal car insurance coverage private use of the car. For example, your commercial coverage applies if you get into an accident while delivering building plans to a client. However, personal overage applies if you get into a mishap while driving the kids to school.
Secondly, your personal car insurance doesn't cover employees who get into accidents when driving your car. For example, personal car insurance won't apply if your secretary gets involved in an accident while delivering mail in your personal car. However, commercial coverage will cover the secretary under similar circumstances.
Liability Limits
Commercial policies tend to have higher liability limits than personal policies. Below are possible reasons for the difference:
The high liability limits require significant investments from businesses.
Taxation
The government allows businesses to deduct their expenses when filing taxes. Commercial car insurance is part of business expenses, and you can deduct them when filing taxes. According to policygenius.com, personal car insurance is only partially deductible if using a personal car for business purposes.
Add-ons
Insurance policies define the risks they cover. Most insurance policies have add-ons that you can use to cover additional risks. Some add-ons are only available for commercial or personal insurance. For example, commercial policyholders can add trailer interchange coverage, but personal insurance excludes the coverage.
Vehicles
You can only insure some vehicles under commercial policies but not personal policies. Insurance companies place vehicles they believe only serve commercial purposes under such policies. For example, tractor-trailers weighing thousands of pounds cannot be on a personal car insurance policy.
Hopefully, you have appropriate coverage for your car. Talk to an auto insurance agent to evaluate your need for insurance and help you buy the right policy if that is not the case. The agent may also help you find discounts that you might otherwise miss.
Share15 September 2021
I have always been someone who loves to work hard for what they have, which is why I started paying attention to how I was protecting my investments. I realized that although I had great medical and dental insurance, my car needed a little extra protection. I started working hard to find an insurance policy that would work well for my needs, and before I knew it, I was able to sign up for a new policy. This blog is all about choosing a car insurance policy that works well for you and your family, so that you don't have to worry about falling short.