How to Know if You Need Commercial Auto Insurance
When driving an automobile, it is a good idea to protect yourself financially from potential accidents on the road. No matter what sort of vehicle you drive, having auto insurance is crucial to ensure that you will be protected in the event of an accident. In most states, it is illegal to drive without having at least some form of minimum automobile insurance. However, there is a huge difference between personal auto insurance and commercial auto insurance. So how do you know if you need commercial auto insurance or not? That question will be answered in this guide.
In order to accurately assess whether or not you need to have commercial auto insurance on a vehicle, first consider who owns the vehicle. Is the owner an individual or sole proprietor, such as yourself, or is the automobile owned by a corporation, rented company, or an employee who uses the car for both business and personal transportation?
The next thing you need to think about is who drives the vehicle. If it is just you driving, then you most likely don’t need commercial auto insurance. On the other hand, if there are multiple people driving the vehicle, such as employees, co-workers, friends or relatives, you may need commercial auto insurance. If you are the only insured driver operating the vehicle, then you would only need personal auto insurance.
Assess how the vehicle is used. Do you take it out approximately two times a day or fewer for job purposes, or do you take it out more than two times in a day for the same business purposes? Commercial auto insurance may be handy here, but if you only use the vehicle to get to and from work each day, then perhaps personal auto insurance would be a better choice. If you use it for farming purposes, you may still be able to get by on personal auto insurance policies, whereas the transportation of products and other services may require you to have commercial auto insurance.
Business Insurance Limits
Of course, every business has an insurance policy in case things go wrong. How much liability insurance is required for your business to have on its vehicles? Is it $500,000 or less for a combined limit on a single vehicle, or $1,000,000 or higher for a combined limit on a single vehicle? If it is $500,000 or less, you may only be required to have personal insurance, but if it is over $5000,000, then you definitely need to consider purchasing commercial auto insurance.
In this guide, you learned the difference between personal auto insurance and commercial auto insurance. Each has similar, yet slightly differing requirements and thresholds. Hopefully you have now learned which type of insurance best suits the vehicle you are driving.
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