The Difference Between Commerical Auto Insurance And Conventional Auto Insurance
Obviously, different types of auto insurance are made to cover different types of risks. The main difference between commercial auto insurance and conventional auto insurance lies in the use of the vehicle. If you use your car to get to work, shop for groceries and take the kids to school, it’s considered personal use and is covered with a basic conventional policy. However, if a vehicle is used for commercial purposes, the rules change and that ordinary auto insurance policy is no longer adequate to cover the greater level of risk associated with commercial use of a vehicle.
Commercial vehicles are defined in different ways. For example, commercial insurance is required if the vehicle is used to transport passengers for hire. A good example of this is taxis or limousines. If a vehicle is used to carry out a service outside of personal use it should also carry a commercial auto insurance policy. Additionally, if a vehicle is used under the name of a corporation or other business entity, such as Harry’s Landscaping Service, Inc., such use is commercial in nature. This also applies if employees of that corporation use the vehicle in the course of their duties.
Commercial auto policies generally differ from personal policies in the amount of coverage a policyholder carries. In fact, it is not uncommon for commercial policies to exceed one million dollars of coverage. However, most of the basic risks that a commercial policy protects against are the same ones found in a conventional personal auto policy. The included coverages are usually bodily injury, property damage, no-fault, collision, comprehensive and uninsured/underinsured motorist protection. Bodily injury and property damage coverage is necessary to protect against lawsuits by third parties. No-fault pays medical expenses for the vehicle’s driver and occupants regardless of fault. Collision and comprehensive covers physical damage to the vehicle, and uninsured/underinsured protection covers against vehicles with no insurance or inadequate insurance.
When searching for the best auto insurance quote – whether for commercial or conventional coverage – it is important to disclose the nature of use that you have planned for the vehicle. No one is being fooled when a personal vehicle is used for commercial purposes. At best, an insurance carrier will suspend the personal coverage because it doesn’t reflect the commercial use of the vehicle. At worst, the owner could face the unpleasant surprise of the insurance carrier refusing to defend him in the event of a lawsuit because the use of the vehicle was fraudulently misrepresented.
Understanding the difference between commercial and conventional auto insurance to determine the coverage you should buy is very important. If you don’t have the right coverage in an accident, the costs could be substantial.
