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The Difference between Personal and Commercial Auto Insurance

The first thing to consider when deciding what type of auto insurance to get for your business is to consider for what purposes you will be using your personal vehicle. For small businesses, the line can often be blurred. Sometimes small business owners and employees use their personal vehicles for business reasons. For example, they might use their own car to travel to job locations, transport materials, or even deliver goods and services.


What’s important to remember is that personal auto insurance policies typically never cover business use, which means you are not covered if you get into an accident while driving for work. (Of course, this excludes your commute to and from work.)


So, what is the best kind of policy to cover multipurpose vehicles? If you’re a business with multiple employees or a sole proprietor who owns a vehicle used primarily for business, you may need commercial auto—or fleet—insurance.

Commercial coverage typically has higher liability limits than personal auto insurance and can cover vehicles used for the following activities:

· Transporting goods or equipment

· Driving clients and/or employees

· Performing a service for which you are paid

· Charging your passengers a fee to ride in your vehicle

· Hauling work-related, heavy loads


Fleet insurance typically requires five or more vehicles that are registered or leased to you or your company and are primarily used for work-related or commercial purposes. Trailers can be included in a fleet once the minimum requirements for motor vehicles are met.


What are the benefits of fleet insurance? The simple answer: many. These are just a few of the basic benefits you’ll reap when you consider fleet insurance:


  • There can be substantial savings when it comes to fleet insurance.

  • All fleet discounts are based on a loss ratio scan. Fewer at-fault claims provide lower loss ratios and, therefore, give you a higher fleet discount.

  • You do not need to list any of your drivers or declare principal operators when you have a fleet.

  • All fleet policies have the same renewal and expiration dates.


Oftentimes, clients hold off on switching to fleet insurance because they aren’t comfortable with the transition. The reality is that the entire process is simple and ultimately better for you and your business. Plus, your Nesbit Agencies

advisor will be there to guide you every step of the way.


It cannot be emphasized enough: personal auto insurance only covers accidents that occur while you’re driving your vehicle for personal use. That includes commuting to and from work and travel unrelated to your job duties. So, if you get into an accident while driving for work, your insurance company will likely reject your claim. It’s important to note that in some cases, personal auto insurance might include limited coverage for business use, so check with your insurance company to find out exactly what is and isn’t covered.


A question that our clients often ask is, Does commercial insurance cover personal use?

The answer is yes. It typically does cover employees who are given permission to drive your business vehicle. This policy will help pay the costs of accidents when an employee is driving, even if the vehicle was used for personal reasons.


Another important question to consider is, How does the cost of commercial auto insurance compare to the cost of personal auto insurance?


Overall, commercial auto insurance costs more because such policies tend to have higher limits, which means more coverage in the event of an accident.


A personal policy typically covers one person driving their own car, while a commercial policy covers an entire business, which can include multiple drivers and multiple vehicles.


Fortunately, commercial auto insurance does not have to be expensive and depends on the specifics of your business. A small business where one or two people drive a company car will have a much lower premium than a big business with a fleet of vehicles and numerous drivers.


Here are factors that affect the cost of commercial insurance:

  • Your industry risks

  • The policy limits you choose

  • Employee driving records

  • The type of vehicles you own

  • The number of vehicles

  • How often the vehicles are driven

  • The type of coverage you choose

  • Auto insurance claims history

Still have concerns? Nesbit Agencies will make your transition into fleet insurance as simple as possible, plus we will ensure that every transaction going forward will be smooth and easy to follow.


Fleet insurance is super-convenient and efficient, and we at Nesbit Agencies make sure all auto needs are met in a timely manner and handled with care.


Not only do we strive to provide you with peace of mind when you switch to fleet insurance but we also excel in customer service. Don’t hesitate to call us now at 952-746-4312!

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