When Do You Need Commercial Auto Insurance


There’s a reason why the job outlook for insurance agents is expected to grow by 7% over the next decade. We rely on these professionals to make sure that we’re covered in the event of an emergency.

Unfortunately, many people who think they’re covered find out too late that their policy doesn’t meet their needs. This is especially common when choosing between personal and commercial auto insurance.

So, when do you need commercial auto insurance? And what does this type of insurance cover?

If you want to know the answer to these questions and more, then you’re in the right place. In this guide, we’ll go over some commercial auto insurance tips for keeping you covered.

What Is Commercial Auto Insurance?

Commercial auto insurance (also known as commercial car insurance) is a type of policy that’s meant to protect vehicles used for business purposes.

Specifically, this insurance policy covers the cost of any damages to your business vehicle. It also protects the business owner and their employees from potential damages they cause or similar liabilities.

Commercial auto insurance policies can range from large to small. For small businesses, they might cover a single car or truck.

For larger companies, they can cover entire fleets of vehicles. If you do own an entire fleet, then it’s better to invest in fleet coverage instead of insuring every individual vehicle.

When Do You Need Commercial Auto Insurance?

In this section, we’ll go over some of the reasons why you might need commercial auto insurance. First, if you’re transporting passengers for a fee, then you will need this type of auto insurance.

So, any Uber, Lyft, and taxi drivers will need to invest in it. The same goes if you deliver food to customers for a fee like pizza or Chinese food drivers.

And, it’s not limited to food. Any goods that you deliver, whether it’s medications, packages, or parcels, will require this type of insurance. Next, any truckers or freight transportation drivers will need commercial auto insurance.

So will anyone that conducts a service with their vehicle. For example, let’s say you’re a locksmith that drives to people locked out of their homes and cars to help them.

Or, you’re a food truck that sells food out of the vehicle. In these situations, personal car insurance will not cover you in the event of an accident. The last circumstances when you need commercial auto insurance relate to ownership.

For example, if you own a vehicle but you let employees drive it, then you will need commercial auto insurance. The same is true if the vehicle you’re driving is owned by a corporation.

All of these situations demand this specialized type of insurance. If you’re driving around with a personal policy, then there’s a high chance you’ll be denied your claim in your time of need.

What Does Commercial Auto Insurance Cover?

It’s important to note that you can craft your commercial auto insurance to meet your unique needs. That being said, there are some basic coverage areas that all policies are likely to cover. These include:

  • Property damage liability
  • Bodily injury liability
  • Collision coverage
  • Comprehensive coverage
  • Uninsured or underinsured motorist coverage
  • Medical payments

Property damage liability goes toward any damage that you or your employees cause to other vehicles or property.

Bodily injury liability goes toward any injuries that you or your driver might cause. Two million people get injured in auto accidents every year, and hospital bills are expensive, so this is especially important.

If your commercial vehicle is involved in an accident with another car, then collision coverage will help cover the damage. This is true regardless of who caused the accident.

Comprehensive coverage deals with other forms of damage like theft, fires, flooding, falling objects, and similar types of natural disasters.

If you’ve been hit by a driver without insurance, then uninsured or underinsured motorist coverage will kick in for any injuries or damages you experience.

Lastly, medical payment coverage will help towards your medical bills regardless of who caused the accident.

There are other add-ons you can use on your commercial auto insurance policy, so make sure you talk to your provider about your options.

When Is Personal Auto Insurance More Appropriate?

If you own a small business that only occasionally uses personal vehicles for business purposes, then a commercial auto policy might not be for you. If you extend your personal policy, you can likely save some money by sticking to your original policy.

However, there’s an important caveat. For personal auto insurance to work for your needs, you need to drive your car 95% of the time for personal purposes and 5% for business purposes.

Even then, you should confirm with your personal auto insurance provider that this type of usage is covered. That being said, if you’re logging a lot of hours on your personal vehicle for business purposes, then you will need to switch to a commercial policy.

The same goes if you’re driving a commercial vehicle. It’s also important to note that if you’re using your commercial vehicle for personal reasons, there’s a good chance your commercial policy will not cover you.

Contact Econosurance For Your Commercial Auto Insurance Needs

We hope this article helped you answer the question, When do you need commercial auto insurance? The most important factor when searching for one of these policies is to find an independent insurance company.

Otherwise, you’ll be at the mercy of whatever insurance policy the branded agency offers you. Instead, go with a company like Econosurance. We have over twenty-five years of experience in protecting the assets of families and businesses.

So, if you’re ready for a policy that’s crafted toward your specific needs, get in touch with us today.

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