Commercial vs. Personal Auto Policies

Written by:
Kelly Conway
Fleming & Conway Agency

One question I frequently encounter as an Agent is whether or not a business should have their vehicles covered by a commercial auto versus a personal auto policy.  In general, the premium is less expensive for a personal auto policy, but the ultimate cost of inadequate coverage may not outweigh the initial savings.  Here are some thoughts to keep in mind:

Many times personal policies do not offer High enough Limits. Commercial underwriting will readily accept limits as high as $1,000,000 and can even go to $2,000,000.  There are also excess policies available for even higher limits.

Hired Auto exposure can be a problem under the personal lines policy when the hired vehicle is not a “private passenger or light truck” type. Consider a contractor that hires a dump truck to remove debris from a job site. The liability would not be covered under a personal policy, but would be under a Commercial policy if written with Hired Auto coverage.

Employers Non-Owned Liability Coverage is not available under personal lines policies. Many times a business owner will send an employee to make a quick trip to the bank or to pick up office supplies in the employee’s own vehicle.  If the business owner is subsequently sued by someone involved in an accident with the employee, the insured can only be protected if they have this coverage.  Again, this coverage is only available on a Commercial Auto Policy.

Loading and Unloading is covered by both personal lines & Commercial Policies. However, the coverage under the Commercial Policy is much broader. With personal lines, once you unload the items and move away from the vehicle, coverage stops. On Commercial policies, coverage stays with you until you deliver the items (tools, stock, equipment, etc.) to its place of origin. Coverage remains with you even if you load the items onto a non-motorized tool (like a dolly or hand-trucks) until you deliver the items to its place of origin. The same holds true for loading. Personal lines offers coverage while next to the vehicle loading items into the covered auto. Commercial provides coverage from the time you pick up, or start carrying items, until those items are safely in your covered auto.

Commercial Auto also provides liability protection for other entities a business owner may work for that requires “Additional Insured” coverage. Example: Any contract with the local, state or federal government; general contractors and bid jobs most commonly require to be named as additional insured on the auto policy. This cannot be done on a personal policy.

And finally, for logistic purposes, most personal lines carriers write a separate policy for each vehicle which can cause issues with regards to billing and coverages.   A commercial policy can carry multiple vehicles and is written on a simple 12 month billing cycle.

Although one of the most overlooked classes for these gaps in coverage is contractor and delivery vehicles, commercial auto coverage is available to all industries, including service and sales.   Call an insurance agent today to make sure you and your business are properly insured in regards to your auto coverage.