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Do I Need to Buy Commercial Auto Insurance?

Buy Commercial Auto Insurance

Not all businesses know when they need to buy commercial auto insurance. In fact, many owners are relying on their personal auto insurance for protection. Why not, your personal auto policy covers your personal vehicle, so why can’t it cover your business vehicles as well? We’re here to tell you that this is a recipe for disaster.

Not sure if you need to buy commercial auto insurance? You should add this question to your next business insurance review, or to the list of things that need answers before you buy business insurance.

For those of you conducting independent research, we’ve put together the reasons why it’s important to invest in proper commercial auto insurance for your business.

Personal auto is not meant for commercial use

Personal auto insurance policies are designed to cover individuals, not businesses. If you use your personal vehicle for business purposes, such as delivering goods or transporting clients, you risk not being covered when you have an accident. In fact, business use may be expressly excluded. Alternatively, commercial auto insurance is specifically designed to cover the unique risks associated with commercial driving, such as deliveries of goods, equipment, or people.

Commercial auto has better coverage

A business auto insurance policy offers higher liability limits than personal auto insurance. This is important because businesses normally have more exposure than individuals. Therefore, the standard limits of $300/$300 or even $250/$500 may not be sufficient to settle losses when injury damages become more severe. Business auto policies are normally offered with $1,000,000 liability limits. Commercial auto insurance will protect your business by providing higher liability limits than a personal auto insurance policy.


When you need to issue certificates, you cannot do this with a personal auto insurance policy. You will have to have a commercial policy. In fact, jobs that require certificates likely require higher liability limits, which are also only offered on a commercial auto policy.

Not all commercial vehicles qualify for personal auto

Private passenger auto policies restrict their vehicle definitions so that commercial vehicles do not qualify for coverage. Alternatively, commercial auto insurance provides coverage for vehicles that are not covered under a personal auto insurance policy. For example, if your business owns a fleet of box trucks or when you have employees who use their personal vehicles for business purposes. A commercial policy can provide coverage for these vehicles.

What is commercial use?

Understanding what is considered a commercial-use vehicle is important when deciding whether or not to purchase commercial auto insurance. Generally, a commercial use vehicle is any vehicle that is used primarily for business purposes, rather than personal use. Here are some examples of vehicles that are typically considered commercial-use vehicles:

  • Delivery vans and trucks – When these vehicles are used to transport goods for business purposes they are considered commercial use vehicles. This includes delivery vans and trucks used by shipping companies, grocery stores, and other businesses.

  • Construction vehicles – If you use your vehicle in the construction industry, such as dump trucks, cement mixers, and backhoes, they are considered commercial use vehicles.

  • Taxis and limousines – Vehicles used to transport people for a fare (or hire), such as taxis and limousines, are also considered commercial-use vehicles.

  • Service vehicles – Vehicles used by businesses that provide services to customers, such as plumbers, electricians, and HVAC technicians, are considered commercial use vehicles.

  • Any vehicle registered under a business name – If a vehicle is registered under a business name, it is generally considered a commercial use vehicle, even if it is used for both personal and business purposes.

Commercial auto provides business-specific coverage

Commercial auto insurance provides additional coverage options that are not available with a personal auto insurance policy. For example, you can add hired and non-owned auto coverage for your employees who use their personal vehicles for business purposes.

Hired and non-owned auto insurance is a type of coverage that provides protection for businesses in case an employee causes an accident while driving a vehicle that is not owned by the company. “Hired” refers to rented or leased vehicles, while “non-owned” refers to vehicles that are not owned by the company but are used for business purposes, such as an employee’s personal vehicle.

The bottom line

While it may be tempting to rely on personal auto insurance for your business vehicles, it’s important to invest in commercial auto insurance to fully protect your business. Commercial auto insurance is specifically designed to cover the unique risks associated with using vehicles for business purposes, and it can provide higher liability limits and additional coverage options to help protect your business in the event of an accident.

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