An Auto Insurance Rundown : Personal and Commercial Insurance

Posted & filed under Car Insurance News.

In the United States of America, as well as many other countries across the globe, auto insurance is mandatory. In order to protect other drivers on the road and also to ensure that you have proper medical coverage and vehicle coverage should someone crash into your car, law requires that you purchase some type of auto insurance.

In the States, liability insurance, a strict requirement, covers medical expenses for injured people in an accident and damages to property or people. For example: If you were the cause of an accident, you are “liable” and thus your liability insurance would cover this.

You need liability insurance whether you have personal coverage or a commercial plan. And while the two policies are fairly similar, as in how they’re handled, there are a few distinctions. Personal insurance covers your personal vehicle, whereas commercial insurance often has higher liability and covers non-owned, rented and vehicles driven by employees.

Which Type of Insurance You Need

Some individuals seeking insurance may go after commercial when they need personal and vice versa. For instance: Say you operate a small business with a family member and drive a “company” vehicle.

Your natural inclination may be to go after a commercial plan, since it is a business, but personal coverage with someone else listed on your insurance can provide ample coverage while saving you some money.

There are a few factors that will help you determine the type of insurance you need.

  • Who owns the vehicle? Is it your vehicle or is it leased out to you by a business entity of some sort? If you own the vehicle, odds are that you will need personal insurance.
  • Who drives the vehicle? If you allow employees to drive the vehicle at all or anyone else other than the owner, they either need to be listed on a personal policy or you need a commercial plan.
  • How is the vehicle used? If the vehicle is involved in commercial use, it is not a good idea to drive it privately. Having a “personal” accident with a commercial policy will leave you holding the bag.

After you realize which type of insurance you need, you can then begin speaking to an insurance agent about other possibilities in your package, like your deductible rate, comprehensive and collision coverage, and many other factors.

The idea here is to find the right balance between your premium price and your overall coverage. You need ample coverage, especially with commercial vehicles, but you should not have to pay a lot for it.