Say you drive a lot for your work. Your company has commercial auto insurance for work vehicles, so do you even need personal car insurance?
In short, yes. You still need personal car insurance. Commercial car insurance provides a limited amount of insurance that only covers vehicles owned by the company. It does not cover personal vehicles owned by employees. A company may also carry hired and non-owned auto insurance for employee-owned cars, but this isn’t guaranteed. It also has limited coverages.
If you’re using a company-owned vehicle for work, you don’t have to worry about insurance, as your employer should have commercial auto insurance for all company vehicles. If you’re using a personal vehicle, however, you will need personal auto insurance or commercial auto insurance. If you only use your vehicle for transportation to and from work, your personal auto policy should cover you. If you regularly use your vehicle for work, however, you’ll need commercial auto insurance.
What Does Commercial Auto Insurance Cover for an Employee?
Commercial auto insurance covers:
- Collision Coverage: Collision coverage steps in if you collide with another vehicle or object while operating the insured vehicle.
- Comprehensive Coverage: Comprehensive coverage steps in for accidents not involving collision. This includes theft, vandalism, windstorms and falling rocks or trees.
- Bodily Injury Liability: This liability helps pay for medical expenses for the other driver and their passengers if you cause an accident.
- Property Damage Liability: This liability helps if you cause damage to someone else’s property.
- Personal Injury Protection: Personal injury protection, or PIP, helps pay you and your passengers' medical expenses after an accident no matter who caused the accident.
- Uninsured/Underinsured Motorist Coverage: This coverage helps pay for damages if you crash with a motorist who doesn’t have enough coverage.
Do I Need Commercial Auto Insurance?
Deciding whether you need commercial auto insurance depends on what you use your personal vehicle for. If you simply use the vehicle to commute or occasionally take a client to lunch, you probably won’t need commercial auto insurance. If you use the vehicle to transport people or items for money or to haul work equipment, you’ll likely need commercial auto insurance.
Does Commercial Auto Insurance Cover Personal Use?
A commercial auto insurance policy will general cover personal use for company-owned vehicles, but not personal employee vehicles.
Is Commercial Auto Insurance Cheaper than Personal?
Car insurance premiums vary due to a variety of factors for both commercial and personal auto insurance policies. You may pay somewhere between $750-$1,200 a year in commercial auto insurance for one vehicle while a personal insurance policy may cost $751-$1,502 a year. Factors affecting these rates include:
- Age. Drivers younger than 25 typically pay more for car insurance.
- Gender. Men usually pay higher car insurance premiums than women.
- Driving record. A bad driving record can increase your car insurance premiums drastically.
- Credit score. Some insurance companies don’t consider credit, but most do. It’s important to build you credit score when searching for insurance.
- Vehicle value. Expensive vehicles cost more to insure.
- Items being transported. Volatile or expensive items cost more to insure.
It’s important to be honest with your insurance agency, however. If you purchase a commercial auto insurance policy for a personal vehicle that’s not used for business purposes, your insurance agency may drop you. If you purchase personal auto insurance for a vehicle frequently used for work, your auto policy may not cover you after a work-related wreck.
Speak with your employer about their auto insurance policies and shop around to find the best insurance policy for your vehicle and its purpose.