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What is the difference between personal and commercial insurance coverage?

Commercial auto vs. personal auto insurance

The distinction between a personal and commercial vehicle is sometimes vague. Find out which types of commercial insurance coverage and auto insurance cover vehicles that are used for business near Waterbury, Ct.

What’s the difference between commercial and personal auto insurance?

Small businesses may have difficulty distinguishing whether a car is personal or commercial. The line between a personal and a commercial vehicle is frequently blurred for small companies near Waterbury, Connecticut. Small company owners and employees sometimes utilize their own cars for business purposes. For example, they may use their personal vehicle to go to job sites, carry equipment, or deliver items.

The majority of personal auto insurance policies don’t cover business use. That means you won’t be covered if you’re in a car accident while on the job (with the exception of your commute). So, which policy covers multipurpose vehicles? Let’s look at three types of automobile insurance coverage in further detail.

commercial insurance coverage

1. Commercial auto insurance

The big difference between personal and commercial automobile insurance is who owns the car. If your company has a vehicle, it must be covered by commercial vehicle insurance. Both personal and commercial auto insurance cover legal fees, bodily injury, and property damage caused by motor vehicles. Commercial auto insurance, on the other hand, typically covers larger claims, different makes of cars, and more complex legal concerns.

This type of insurance coverage typically includes all the business’s employees as additional insureds, which means every employee with a valid license can drive your company vehicle. The cost of commercial car insurance is affected by their driving records, along with the policy’s coverage limits and deductible.

Commercial auto insurance covers business vehicles

Commercial auto insurance is the form of motor vehicle insurance that covers company cars. If you’re a sole proprietorship who drives a car primarily for business, you’ll need commercial automobile insurance. Commercial coverage typically has higher liability levels than personal vehicle insurance. It can cover vehicles used to:

  • Transport goods or equipment
  • Drive clients or employees
  • Perform a service that you’re paid for
  • Charge passengers a fee to ride in your vehicle
  • Charge people a fee to transport goods in your vehicle
  • Haul heavy, work-related loads
  • Tow a trailer used for business

Does commercial auto insurance cover personal use?

Employees who have been given permission to drive your company car are generally covered by commercial auto insurance. This coverage will help cover the expenses of accidents caused while an employee is operating your business vehicle, even if it was for non-business purposes.

So, what about personal vehicles occasionally used for work? That’s where a policy called hired and non-owned auto insurance (HNOA) comes into play.

2. Hired and non-owned auto insurance (HNOA)

If you or your workers utilize their personal auto for business errands, you should think about purchasing hired and non-owned automobile insurance. This coverage covers you if you get into a car accident while driving your own vehicle for business reasons. It also protects your company if it rents or leases a vehicle. This policy only covers legal fees incurred as a result of an accident; it does not cover physical damage. For example, it would not pay for repairs if your car is damaged in an incident.

HNOA covers personal, leased, and rented vehicles used for work

You may want to purchase this liability insurance if:

  • Your employees run work errands in their personal vehicles
  • You rent a car for a business trip
  • Your company leases vehicles

Auto Insurance

3. Personal auto insurance

The owner of the car is only covered by personal auto insurance if an accident happens when he or she is driving their vehicle for personal use. Commuting to and from work, as well as non-job-related travel, are all covered under this type of coverage. The policy typically covers the vehicle’s owner and one or two immediate family members.

Your personal car insurance won’t cover business use

Most personal auto insurance does not cover business use. If you have an accident while driving for work, your insurance company is likely to reject your claim. Business use may be covered under certain circumstances. Check with your insurance provider to find out what is and isn’t covered by your policy..


How much does commercial auto insurance cost vs. personal auto insurance?

In general, business auto insurance is more expensive than personal auto insurance. That’s because commercial policies have larger limits, so there is more coverage in the event of an accident.

A personal auto insurance policy generally protects one person driving their own vehicle, but a commercial policy protects an entire company. It’s possible that the insured has numerous drivers and vehicles, as well as employees with poor driving records.

Commercial auto insurance, on the other hand, does not have to be costly. It is determined by your company’s specifics. A small firm with only one or two workers who drives a company vehicle will pay less than a large business with a fleet of vehicles and many drivers.

Factors that affect the cost of commercial car insurance include:

  • Your industry risks
  • The type of vehicles you own
  • The number of vehicles
  • How often the vehicles are driven
  • Employee driving records
  • The type of coverage you choose
  • The policy limits you choose
  • Auto insurance claims history

Compare quotes from trusted carriers with American Financial Solutions LLC

Contact American Financial Solutions LLC at 866-737-1727  today to compare quotes for commercial auto insurance and other business insurance policies from top-rated U.S. providers. Our licensed insurance agents can help you find the right coverage for your small business.


When you drive with quality coverage, you drive with peace of mind. American Financial Solutions can help you stay protected for wherever the road takes you.  


4 thoughts on “What is the difference between personal and commercial insurance coverage?”

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    1. Thank you for your interest in our blog. We’re glad to hear that you enjoyed it! I’m sorry to hear that you are feeling a little lost with all of the options available – we understand how overwhelming this can be when starting out.

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  2. I am glad that you explained that personal car insurance won’t cover business use if you are in an accident. I often use my car for business purposes. It would be smart to discuss my situation with an insurance expert so that I can get the right coverage for my needs.

    1. Thank you for taking the time to read our article, Greta. I’m glad that it helped and also happy to hear that you’ll be speaking with an expert about your needs. We have a team of professionals here who are always available to answer any questions at all hours – just give us a call!

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