You need commercial auto insurance if you use your vehicle for making money whereas if you utilize your vehicle for commuting to the office or other places then you need personal auto insurance. Not just that, there are more differences in both types of policies. Learn more and decide which type of insurance you should opt for.
Vehicles make our life immensely convenient, but the motive behind every auto purchase is not the same. Some people buy it for making daily commutes easy, some like to keep changing and upgrading their fleet with new versions, and some use it for commercial purposes. No matter what your objective is, the most common thread that keeps your vehicle protected is auto insurance.
Whether you have purchased a truck for earning a livelihood or bought a car to make your travel convenient, you need to obtain vehicle insurance. Now you might get confused about which type of policy you should opt for because there are two categories in it, i.e. commercial auto insurance or personal auto insurance. Both types of insurance are more or less the same but they differ from each other in various aspects. To help you decide which sort of auto insurance you need for your vehicle, we have explained the difference between the two.
What is commercial auto insurance? Who needs this coverage?
Commercial auto insurance is designed for those vehicles which are used for money-making. Whether you do it yourself or have truckers to carry out this business activity, you need to obtain commercial auto insurance. For example, dump truck insurance is a type of commercial auto insurance that protects a business using trucks for transporting dirt, asphalt, gravel, rock, and materials used for mining, construction, etc. This policy protects the insured against property damage, physical injuries, or both in the event of an accident. It pays out all the expenses that an insured person suffers financially in the incident.
As there is a high risk involved in commercial driving, you need to add different types of coverage to your policy for complete fortification. Commercial auto insurance policy includes:
- Liability coverage: This policy compensates for the property damage and bodily injury suffered by the other person in an accident. Liability coverage also pays for the legal expenses after a lawsuit.
- Medical payment: No matter whose driver was at fault in an accident. This coverage pays for the medical bills of the driver as well as the passengers who get injured in the incident.
- Comprehensive coverage: This coverage pays for the property damage caused by theft, fire, explosion, vandalism, etc.
- Collision coverage: It covers you against the damages you face when your vehicle collides with another object or car.
- Uninsured or underinsured motorist: This coverage proves to be beneficial in hit-and-run cases. Also, if an underinsured or uninsured driver causes property or physical damages to you, then this coverage pays for all the expenses you suffer in the incident.
- Physical damage: Physical damage coverage protects your own commercial vehicle against damages that occur in an accident. You get compensated for the loss you have suffered.
Almost every state requires commercial auto insurance for businesses. But if you carry out the following activities with your vehicle then you need this coverage:
- Haul goods or people for money.
- Transport heavy equipment or tools.
- Run a commercial trucking business.
- Own large or medium trucks.
- Frequently travel to job sites.
What is personal auto insurance? Who needs this coverage?
Personal auto insurance is designed for vehicles that are used for private purposes. This policy covers the medical expenses and the vehicle damage you suffer after an accident. But this insurance doesn’t cover the loss happening when you use your personal vehicle for commercial purposes or delivering shipments between job sites. This type of insurance comes in two forms:
- Liability insurance coverage: This coverage is state mandated and protects the third party against the property damages and physical injuries caused by your private car. The main objective of this coverage is to keep the public safe on the road.
- Comprehensive and collision coverage: If you want to provide blanket coverage to your vehicle that protects you against the risk of theft, fire, explosion, vandalism, riots, natural calamities, or colliding with other objects or vehicles then taking comprehensive and collision coverage is a smart financial move. It protects your investment from all the likely risks on the road.
You need to obtain personal auto insurance if you:
- Commute to work daily.
- Travel somewhere other than your job.
- Use your car to buy essentials.
If you use your vehicle for both personal as well as commercial purposes then you need to customize your policy according to the level of risks you are exposed to.
Purchasing any type of auto insurance might feel like an extra expenditure but it holds a lot of advantages. It provides great financial support when you suffer or cause big damage in an accident. You need to analyze what type of auto insurance is best for you.
Knowing the difference between these two insurance coverages will help you in customizing your vehicle policy according to your requirement. Commercial auto insurance is not just for big trucks and other commercial vehicles. Pickup trucks and cars that are used daily can also benefit from this coverage. But if you use your vehicle just for commuting to work and grabbing groceries then there is no point in taking large coverage. Because you are comparatively less exposed to the risks than a trucker using commercial vehicles daily for hauling various types of shipments.
Like any other insurance product, both commercial, as well as personal auto policies, have certain inclusions and exclusions. You need to go through all the terms and conditions that are included in the policy before partnering with any insurance company. Auto insurance is supposed to benefit you in the long run, make sure you choose the correct coverages that protect your investment, you, and the people on the road unfailingly.