All motorized vehicles, whether used for personal or business purposes, need auto insurance. Automobile liability insurance – required by most states – covers medical expenses for injured persons and damages to the property of other individuals as a result of a motor vehicle accident caused by the insured’s negligence.
While the types of coverage provided by personal and commercial auto insurance policies are essentially the same, there are important distinctions. Typically, commercial auto insurance policies have higher liability limits, for example $1 million. They also may have provisions that cover rented and other non-owned vehicles, including employees’ cars driven for company business.
Several factors related to ownership and use of vehicles determine whether a personal or commercial policy is appropriate. These include:
- Who owns or leases the vehicle – you individually or the business as an entity
- Who drives the vehicle – you or your employees
- How the vehicle is principally used – for example, transporting people, delivering packages or carrying hazardous materials