Understanding the Differences Between Personal and Business Car Insurance

Vehicles used for personal and business purposes are not the same. They involve a different level of risk and can bring severe repercussions for the company in case of an accident, including legal, medical, and financial. 

That is why there are different types of car insurance meant for each of them: personal car insurance and business car insurance. How are the two different?

Personal car insurance provides coverage for personal use vehicles, while business car insurance covers aspects like transportation and goods delivery. The annual premium for personal car insurance is generally lower than commercial car insurance.

There are possibilities where you own both. In that case, you can check out the best cheap car insurance in Illinois that will provide coverage to both your cars at an affordable rate. This article talks all about the difference between personal and business car insurance. 

What is Personal Car Insurance?

Personal car insurance features policies that are designed for vehicles for personal use. These can include running errands, commuting to work daily, or even going on road trips.

What Coverages Do Personal Car Insurance Policies Provide?

Personal car insurance policies cover personal cars based on the undermentioned pointers.

Liability

The policy covers any damage caused by your car to another car or property due to an accident. 

Collision

If your car runs into another vehicle or object, the policy covers the damage, irrespective of whose fault it is.

Comprehensive Coverage

Personal car insurance plans provide comprehensive coverage to the car and the driver in case of non-collision events. These could be vandalism, theft, or natural disasters.

Personal Injury Protection

A personal car insurance policy pays for all the medical charges if the driver or the passengers are injured by an accident involving the insured vehicle. 

Uninsured or Underinsured Coverage

In case the driver of the vehicle is uninsured or underinsured, personal car insurance pays fully to compensate for any damage.

What Is Business Car Insurance?

Business car insurance policies offer more specific coverages and are designed for commercial use vehicles. These vehicles are used to meet clients, transport goods from one place to another, or even deliver products.

What Does a Business Car Insurance Cover?

Business car insurance pays for property damage and bodily injuries of drivers sustained from accidents involving the commercial vehicle. The policy offers broader coverage and minimizes financial risks. As a result, they have higher premium rates and specific limits. 

The specific business car insurance coverage varies from state to state and business to business. All in all, commercial business car insurance will include the following:

Liability

Business car insurance policies cover liabilities, including car damage and injury to drivers, just as personal car insurance does. Additionally,  they also cover damages to cargo that are being transported, employees traveling as passengers, and legal hassles.

Non-Owned Vehicle Coverage

The business company might use hired/non-owned vehicles for business purposes. In such cases, a business car insurance policy pays for liability protection for both the driver and the non-owned vehicle.

Commercial Property Protection

In case of damage to the commercial vehicle while transporting cargo, the business car insurance provides coverage to the damaged goods as well. 

Driver Screening

The best part of certain business car insurance policies is that they require a complete screening of the driver who’s supposed to drive commercial vehicles. This ensures they have a good driving record and chances of accidents are minimized.

Differences Between Personal and Business Car Insurance

Both personal and business car insurance policies offer their set of liability coverages. However, there are a few differences between these two. What are they?

1. Premiums – The average annual personal car insurance premiums are lower than business car insurance. Personal cars are less prone to risks than commercial vehicles due to the difference in their nature of use. 
2. Policy Terms – Usually, personal car insurance policies allow more flexibility than business car insurance. For personal insurance, you can choose your coverage limits, deductibles, and other policy terms.

Business car insurance policies are more rigid because they cover goods and services that are not always yours. They come with very specific coverage limits and types.

1. Claims Process – The claims procedure for personal car insurance policies is usually hassle-free and straightforward. It requires the policyholder along with the affected vehicle.

In the case of business car insurance policies, the claims process is a bit complicated because of the involvement of different parties like business owner/s and/or employees. The time required to clear the claims process is longer because it requires more documents for validation.

Final Thoughts

If you own a personal car and have commercial vehicles for your business simultaneously, then it is wise to choose an insurance plan wisely.

I recommend you look up different plans and policies, read their terms, and then decide upon one that perfectly fits your bill and business.

FAQs

• Is personal car insurance easier to purchase than business car insurance?

Yes, personal car insurance is easier to purchase, as it requires only the owner of the car and the car details. It is hassle-free.

• How much more do I have to pay for business car insurance than personal car insurance?

The insurer will calculate the premiums based on estimated risks associated with your business. It will be more than a personal car insurance premium, but the amount depends on the specific situation.

• If I am driving my family in a commercial vehicle, which insurance will cover its damage?

Business car insurance will cover the damage because the vehicle you are using is a commercial one.

• How much does a basic business car insurance premium cost in Illinois?

Business car insurance in Illinois costs around $147 on average per month.