The Difference Between Commercial and Personal Auto Insurance

The Difference Between Commercial and Personal Auto Insurance

Auto insurance is essential to protect you from financial losses associated with car accidents. There are two main types of policies: personal and commercial. The line between these two categories can sometimes be confusing, especially if your work and home life tend to merge with each other. With that said, let’s outline some key differences between commercial and personal auto insurance.

Defining Commercial and Personal Auto Insurance

Before we get into the differences between the two, here’s a general overview of personal and commercial auto insurance definitions. 

Personal Auto Insurance

This is designed for individuals who use their vehicles for personal use. It typically covers you as the policyholder for any damages or injuries sustained or caused while operating your vehicle.

Commercial Auto Insurance

Commercial auto insurance is for business use, including driving to see clients, transporting goods, or any other operational task. Coverage generally encompasses damages or injuries caused or incurred during a vehicle’s operation for work-related purposes.

Differences Between Personal and Commercial Auto Insurance

Generally, personal and commercial auto insurance hold the same purpose: To protect you and the vehicle from potential risks. However, the policyholder’s coverage limits, costs, and needs vary. Let’s explore these differences in more detail:

Needs and Coverage Limits

Personal auto insurance is reserved for individual needs and excludes business use. You will likely not have coverage if you get into an accident while driving for work-related reasons (not including your commute to and from work). Personal coverage is usually for the owner of the car and one or two secondary drivers, like family members.

On the other hand, commercial auto insurance has higher coverage limits because there can be more varied risks, depending on the industry. Because of these distinctions, commercial auto insurance policies are highly customizable. Like personal insurance, commercial auto policies can cover damages and injuries related to accidents; however, in most cases, you’re only covered while operating the vehicle for business purposes. Commercial auto insurance encompasses more complex scenarios, including:

  • Insuring numerous employees
  • Transport of goods or equipment
  • Driving clients or employees
  • Towing a trailer for business


Commercial auto insurance is usually more expensive than personal policies because it has higher coverage limits, as outlined above, which include multiple drivers and vehicles. It also accounts for employees with different kinds of driving records. The cost of your commercial auto insurance also depends on factors like:

  • The type and value of the car
  • The number of vehicles you own
  • Your unique industry risks
  • Your claims history
  • Distances covered

These factors are similar to personal auto insurance, except all the variables apply to the individual and immediate secondary drivers instead of an entire business.

How to Know if You Need Commercial or Personal Auto Insurance

Changing workplace landscapes can blur the line between home and business, making it challenging to understand which policy you need. This is especially true if:

  • You’re self-employed or have a business based out of your house
  • You work for a ridesharing company
  • You use your personal vehicle for business purposes
  • You use the business vehicle for personal work or errands

While the rule of thumb is that any significant business use should require a commercial auto policy, there are cases where this may not be necessary. For example, if you’re the only vehicle owner, are self-employed, and work from home, personal auto insurance may suffice because you likely won’t make many business-related trips. 

Every situation is different, so it’s essential to speak to an insurance broker. At Tanner Insurance, we’re here to answer all your questions and find the best commercial or personal auto insurance to suit your needs. Get in touch with us today or get an instant quote online.

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