How Commercial and Personal Auto Insurance Are Very Different

Before buying an insurance policy for your vehicle, it is crucial to know the difference between how commercial and personal auto insurance works. Depending on the purpose for which the vehicle is going to be used, owners should select auto insurance. 

Both insurance policies have different criteria regarding coverage, claims, premium, payout, and more. Let’s look closely at each and see what they entail.

What Is Personal Auto Insurance?

Personal auto insurance is an insurance policy that you buy for your personal vehicle. It secures you from financial loss in the event of an accident or theft. Your insurance provider compensates for the damages, given compliance with the policy terms and conditions. 

Depending on your policy, personal auto insurance can cover liability, medical payments, and damage. Auto insurance costs the typical American $1,771 annually. According to IBISWorld, there are about 215 million insured drivers in the United States, and the sector is expected to reach a market size of $316.2 billion by the end of 2022. 

What Is Commercial Auto Insurance?

commercial auto insurance policy provides physical damage and liability coverage for usage, conditions, and amounts not usually covered by a personal auto insurance policy. It is a type of business insurance that covers commercial vehicles, including company cars and other vehicles used for work-related activities, in addition to a wide range of commercial trucks and vehicles. 

In terms of revenue, the commercial auto insurance market is expected to reach $52.2 billion by the end of 2022. 

What Are the Differences Between Commercial and Personal Auto Insurance?

When your vehicle is damaged, insurance might help you cover your financial expenses. Motor insurance is crucial for protecting your vehicle from potential losses or damages, whether it is a personal or business vehicle. To that end, knowing the key components of both personal and business auto insurance is crucial to making the right decision. Here are the key differences:

1. Premiums

The premium of personal auto insurance is often less than that of commercial auto insurance. The reason is the comparative usage of the two. A personal vehicle usually travels fewer miles, whereas a commercial car has more miles on it in general. Given the parameters, the cost of the premium amount of commercial auto insurance also increases. 

2. Risk Factor

The risk factor is one of the primary reasons why commercial auto insurance costs more than personal auto insurance. Since a commercial vehicle is on the road for longer, it increases the chances of being vulnerable to accidents or other disruptions.

3. Coverage

Since the premium for commercial auto insurance is high, the coverage follows the same trend. The insurance cover in the case of commercial auto insurance is more than the personal auto insurance. The following table represents the differences between the two types of insurance.

 Personal auto insuranceCommercial auto insurance
Coverage inclusions
Coverage exclusions

4. Claims

In terms of documentation and claim procedure, the following are the major differences between the two types of auto insurance.

 Personal auto insuranceCommercial auto insurance
Claim ProcedurePrior to starting the process, the insurance provider must conduct a necessary FIR or on-site survey or inspection.Unless necessary, FIR is not required. Repair the vehicle at one of the network garages to receive compensation.
Claim documentsRegistration document, driver’s license, and first Information report (FIR). A copy of the insurance contract original bill for repairs, receipts for payments in case of refund may also be required in some cases.Driving License, driving Permit, fitness certificate, and FIR. Tax book, trip sheet, and an insurance policy copy may also be required in some cases.

Can We Use Personal Vehicles for Business Use?

If you want to use your personal vehicle for commercial use, you may want to consider purchasing HNOA insurance or Hired and No-Owned insurance. It could apply in case you are renting a personal vehicle for commercial use or using your personal vehicle for your company’s work. 

However, it covers the vehicle liability on a secondary basis, which means that you can claim the coverage from HNOA insurance only when the primary insurance or the insurance by the rental agency is exhausted.   

How Can We Help?

Auto insurance is not a one-size-fits-all policy. So, you should carefully study the pros and cons of the auto insurance policy before investing in it. 

We at Gonzalez insurance are not just insurance policy providers but also advisers. 

We first study our client’s driving patterns by asking detailed questions about their usage. Once we have gathered all the required information, we analyze the risk factors before suggesting an insurance policy. We ensure that the policy we offer to our clients caters to all their needs in the best way possible.  

If you are also looking for a custom-tailored policy for your auto insurance needs, kindly connect with us here.