Commercial vehicles

Commercial Auto Insurance vs. Personal

Updated March 5, 2024 . AmFam Team

If you’re self-employed or a small business owner, you may often drive your vehicle for business purposes — but are you sure you're covered with the right auto insurance? You might think your personal auto insurance policy will protect you from the unexpected, but before you head out on your next entrepreneurial endeavor, you’ll want to find out if commercial auto insurance needs to come along for the ride.

Commercial auto insurance (also known as business auto insurance) offers protection for vehicles used specifically for business — whether it’s a company dedicated vehicle or personal vehicle. A commercial auto insurance policy can be customized to the needs of your business and provides protection to you and your business from costs associated with property damage, injury and liability claims.

On the other hand, it’s important to know that personal auto insurance may exclude certain business uses of a vehicle. That’s one key reason why you’ll need commercial auto insurance for your business’s vehicles.

Do you know if your vehicle needs commercial insurance coverage? Let’s take a look and find out.

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What is the difference between commercial and personal auto insurance?

The main difference between commercial and personal auto insurance is the coverage provided. A personal auto policy provides coverage to protect you, your personal assets and prevent you and your family from experiencing financial hardship. Commercial auto insurance provides coverage to protect you and businesses from auto-related lawsuits and settlements.

Another key factor is vehicle ownership. If your vehicles are owned by your business, they need to be covered under a commercial auto policy. That way commercial auto insurance will help protect your business’s finances from costs related to accidents or other covered losses. It’s events like these — when you or your employees are driving one of your business’s vehicles — where you need this protection most.

Do I need commercial auto insurance?

How do you know when you need business auto insurance for your vehicle? Consider the following:

How is the vehicle used?

If you own a business, have a business owner policy or general liability policy for your business, and own or use the auto in conjunction with your owned business, you’ll most likely need a commercial auto policy to protect those vehicles and your business.

Who owns the vehicle?

Your vehicle will most likely need commercial auto insurance if it’s owned by a business, but if you’re the sole proprietor, you might only need a personal auto insurance policy. For instance, if you only use your vehicle simply for commuting to and from work, you might be covered by your personal auto insurance policy. Contact your agent to make sure.

You’ll typically need commercial auto insurance if:

  • Any of your vehicles are owned by a partnership, LLC or corporation
  • Any of your vehicles are registered or titled to a business, including corporation or partnership
  • Any of your employees or you rent or lease vehicles for business purposes
  • Any non-listed drivers use their own vehicles to conduct business on your business’s behalf

How is the vehicle being used?

The type of your vehicle, ownership and how the vehicle is used are important factors when determining if you need commercial auto insurance. Consider the following:

  • Are any of your vehicles a dump truck, semi or commercial trailer?
  • Do any of your vehicles, including pickups, vans or utility vehicles, exceed a gross weight of 15,000 pounds?
  • Do any of your vehicles have catering equipment?
  • Is your vehicle outfitted for snowplowing and not used for personal use snowplowing?
  • Are any of your vehicles equipped with altered suspensions, hydraulic lifts?
Tractor picking up large round bales

How much does commercial auto insurance cost?

To determine the cost of your commercial auto insurance, you’ll have to look at factors such as the number of vehicles you need to insure and the amount of coverage you need. Other factors that are considered include:

  • Cost — new or MSRP — of the vehicle
  • Type or body style of the vehicle
  • What industry your business is in and how the vehicle is used
  • Where you drive the vehicle
  • Where the vehicle is garaged during the night or non-work hours
  • Limits, coverages and deductibles

Risk is important an important factor to consider as well. An insurance company is going to look at the driving records of the drivers who will be behind the wheel of your commercial vehicle. In this case, high-risk drivers who have bad records will cost more to insure or may be excluded from coverage. Claims history will play a role in your commercial auto premium too.

Can I write off my commercial auto insurance?

If your vehicle is used for commercial or business use, your commercial auto insurance can be tax deductible. You can typically deduct vehicle-related costs as long as you can prove that you use that vehicle for business purposes. Be sure to consult your trusted tax advisor or accountant first.

Get the Commercial Auto Insurance Your Business Needs

Whether you’re a one-person operation or an expanding business, understanding where your company needs coverage will ensure success in the long run. Connect with an American Family Insurance agent (Opens in a new tab)today to find the right coverage for a personal vehicle or business vehicle today.

This article is for informational purposes only and includes information widely available through different sources. This article does not afford, offer, or guarantee any coverage.

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