Making sure you have the right vehicle insurance coverage – whether it is for personal or commercial use – is imperative to protect yourself, your loved ones, and your property. It’s also required by law in most states.
But how do you decide what type of coverage you need? What should you be looking for in an insurance policy? This is where it can get tricky, because even if you already have car insurance, you may be underinsured if you haven’t chosen the right policy.
Personal vs. Business
Whether or not you need commercial auto insurance isn’t always a simple question to answer. You may not use your car for obvious commercial uses like making deliveries or hauling materials, but there are some circumstances where your use of your personal vehicle in connection with your business does require a commercial policy.
For example, if you use your car regularly to see clients, meet with vendors or visit other offices and locations to run your business, you probably should be looking at commercial insurance. On the other hand, if you are an employee using your own vehicle to make occasional trips to other locations for your job, then personal use would still be more applicable – although not necessarily always. If you are frequently on the road for your job, which is often the case for salespeople for example, you still may require a commercial policy.
Of course, if you’re transporting people or goods, then you definitely need commercial insurance. It doesn’t matter what the value of the goods are – you could be delivering pizzas or expensive works of art – your personal car insurance is unlikely to pay for damage or injuries for an accident if you were engaged in transportation services for which you were being paid.
When it comes to deciding whether you need commercial or personal insurance, you’re best bet is to talk with your insurance agent. If you’re shopping around, discuss your vehicle usage with each insurer to make sure the coverage you buy will provide the level of protection you need.
What Does Insurance Cover?
That depends entirely on the type of cover you take out. Here are the main types of coverage:
- Liability: If you are found to be at fault for an accident, liability pays for the damage to the other party. It’s important that you carry both property damage and bodily injury liability insurance to cover both auto repairs or replacement and any medical costs. Liability insurance is required by law in most states.
- Collision: Covers the cost of repairs or replacement to your car when it is involved in an accident with another vehicle or object.
- Comprehensive: This is coverage for incidents that do not involve a collision, such as vandalism, fire, theft or damage from severe weather such as flooding or hail.
- Uninsured or Underinsured Motorist: If you are involved in an accident with a motorist that does not hold enough insurance to cover the cost of damages, or you are a victim of a hit-and-run accident, this insurance will provide coverage for you and your property.
- Medical Payments: This is coverage that specifically covers costs of medical care after an accident regardless of fault.
- Personal Injury: Additional cover for medical costs and loss of income as the result of an accident.
- Gap Insurance: This cover can be important for those drivers with a car loan as it covers any gap between the amount owed on a car loan and the insurance settlement when the payout does not cover the full cost.
Buying The Right Insurance
The right insurance depends entirely upon the vehicle you drive and how you drive it. Before you start calling around to get quotes, it’s important that you figure out what level of coverage you’re comfortable with – regardless of whether a personal or commercial insurance policy is the best fit for you.
Many insurers will provide coverage for occasional business use under a personal insurance policy or offer ridesharing insurance for those operating as rideshare drivers. This is important to note as it can save you money. While it is necessary for many, commercial auto insurance is often more expensive than personal insurance, so these are worth discussing with your insurer.
If you do require a commercial policy, you’ll need to answer a number of questions about your work or business, vehicle, how much you drive, and if the policy needs to cover additional drivers.
5 Ways You Can Save On Car Insurance
- Maintain a good credit score as this can affect your premiums.
- If you find you are driving less now than when you took out the policy, talk to your insurer to see if your reduced mileage qualifies for a lower premium.
- Consider increasing your deductible. If you have a good driving record and the thought of paying more out of pocket if you cause an accident doesn’t worry you, a higher deductible can significantly reduce your premium.
- Shop around! Compare rates from all insurers before renewing your policy annually.
- Look for discounts. Many insurers offer good driver and low mileage discounts, discounts for having a car alarm, immobilizer or tracking system, and they usually offer bundle discounts if you take out more than one type of insurance policy (i.e. car + house).