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Personal Auto vs. Commercial Auto Policies

October 23, 2018 | Ryan Kagarakis

Many consumers often think that their personal auto insurance will cover them if they happen to be driving for work. Consequently, customers who have a commercial auto insurance policy believe that they are covered when they use their vehicle for personal use. With the cost of claims rising for both personal and commercial auto policies I think it’s time we set the record straight.

Personal Auto Coverage

Although there are some exceptions, personal auto policies are designed exclusively to cover the private use of vehicles. Most insurance companies see the exposure of driving commercially as a higher risk so they want to carve out any and all business related driving. Commercial driving can include hauling heavy material and/or more frequent driving exposure for service-related tasks. Since insurance companies are in the money making business, they will often times specifically exclude business related driving. For example, a typical Allied (Nationwide) personal auto policy specifically excludes claims arising from “Maintaining or using any vehicle while that person is employed or otherwise engaged in any “business” (other than farming or ranching). “Business” as defined by the policy, includes trade, profession, or occupation. For example, if a business owner purchases a personal auto policy but uses his car to pick up and deliver material to customers he would technically not be covered under his policy for liability, compressive, or collision coverage if he were involved in an accident.

Commercial Auto Coverage

A commercial auto policy is specifically designed to cover businesses while they are on the road in the course of business. A commercial auto policy is the preferred method of covering both the listed vehicles on the policy as well as liability for their employees while they are driving on behalf of the company. However, if a business owners or employee uses their vehicle for personal use while they are not driving for business they will want to check that there is coverage for that as well. Many commercial auto carriers will rate vehicles as “business” only which would exclude liability, comprehensive, and collision claims if the vehicle were being used personally.


Because commercial auto can have many variables we recommend reviewing your policy and asking yourself the following questions:

  • Who is the vehicle registered to? Is it registered personally or to the business?
  • How is your policy rated? If you are using the vehicles for business is your policy rated as a commercial or personal exposure?
  • If you have a personal policy but you use your vehicles for business does your policy have any “give back” coverages?
  • Consequently, If you have a commercial policy but you occasionally use your vehicle for personal use does your policy have any “give back” coverages?
  • What limits do you have? Are they enough? Standard commercial auto policies are rated with $1,000,000 of liability. Considering our litigious society, would this cover you in a worst case scenario situation?

Ryan Kagarakis
Commercial Insurance Broker at Brown & Brown Inc.

Phone: 916.625.4616 | Direct Fax: 800.761.6733