What Is Commercial Auto Insurance? (5 Things You Should Know)

Personal auto insurance will leave you “high-and-dry” if you have an accident while operating your vehicle in the course of doing business.

But what is commercial auto insurance? And how is it different from personal auto insurance?

Am I covered if I get in an accident while driving for work? If you or your employees do any driving for your company, is there coverage? You’ve probably been asking yourself these questions.

Take a look at this guide to learn the 5 most important things you should know about commercial vehicle insurance in Indiana and how ISU Insurance and Investment Group can help your business.

What Is Commercial Auto Insurance?

Commercial auto insurance is an insurance policy that protects you and your business from vehicle accidents that your personal auto insurance doesn’t cover, during the course of doing business. There’s a  thin, but well defined, line between what these two auto insurance policies allow, and knowing that difference is important for you and your business.

A personal auto insurance policy has an exclusion for accidents that happen while using your car or truck for business activities.  It won’t pay for repairs, provide treatment for injuries, or protect you from lawsuits from accidents that occur while transporting objects or people in return for money and other business activities.

For example, if you are a plumber or HVAC contractor and haul materials to a job site, you need commercial vehicle insurance. If you’re a landscaper and transport your employees and equipment from one place to another, you need commercial vehicle insurance.

However, personal auto insurance will cover damages incurred by you and your employees during the normal commute to work or going out for lunch in the middle of the day.

The key question for determining if you need commercial auto insurance is, “Am I being paid or paying employees while I or they operate my vehicle?” If the answer is yes, then your business needs to look at obtaining commercial auto insurance coverage.  

Vehicles that need this type of insurance include service utility trucks, box trucks, work vans, and other company cars but even employees’ personal vehicles that they use for work purposes may need commercial coverage. This can be a common coverage gap that is overlooked by businesses.

Commercial auto insurance coverage protects more than just the vehicle. Coverage can also extend to the goods or equipment inside the vehicle, trailers attached to the commercial vehicle, as well as liability for people injured.

How Is Commercial Auto Insurance Different From Personal Auto Insurance?

A vehicle with commercial auto insurance is one you use in relation to a business. This could be as an employee of another company or as a self-employed contractor, freelancer, etc.

The main difference between these two types of insurance is one covers a vehicle when it is used in the course of business and the other when the vehicle is used for personal, non-business activities.

In general, a car should be covered by personal auto insurance if you bought it under your name and use it for everyday personal activities. If a car or vehicle is purchased for the primary purpose of using it for your business, it should be covered under a commercial auto insurance policy, even if it is titled in your personal name.

This can get a little sticky if you or your employees use a personal car for company work, like a territory sales rep, service technician delivering pizzas, even driving for a ride-sharing service. What is allowed or excluded on a personal auto policy can vary by insurance company. In these cases, you should talk to your insurance professional. They’ll be able to guide you whether or not you need commercial auto insurance coverage or if a personal auto insurance policy with the proper endorsements is adequate.

Why Do You Need Commercial Insurance?

Every personal auto insurance policy makes a distinction between personal use and business use of a vehicle. There are many claims denied each year on cars insured with personal auto policies due to business use. Although the coverage looks the same on the policy, what is allowed is very different. Personal insurance doesn’t provide the specific protection a business might need and most personal auto insurance policies exclude coverage for any claims resulting from an accident while doing business.

Your business needs the coverage offered by commercial auto insurance. It picks up the business use coverage that personal insurance excludes.

But there can be a bit of grey area when it comes to your work activities. For some professions, such as real estate agents, your personal policy will likely allow if they are notified up front.  If you aren’t sure if you qualify for a commercial vehicle insurance policy, you should contact your insurance agent.

In most cases, you should get commercial insurance for any vehicle you use for work purposes.

What Does Commercial Insurance Cover?

Commercial auto insurance covers many of the same things your personal auto insurance covers. This includes things like collision, medical payments, liability, and comprehensive. But there are unique coverage differences as well.

Here’s a quick list of some of the common commercial vehicle insurance covers.

Bodily Injury Liability

Commercial insurance will cover injury or death in an accident for which you are the driver who’s at fault. This also includes legal defense in many situations.

Medical Payments/Personal Injury

Commercial auto insurance will cover the medical cost of personal injuries sustained in an accident. It doesn’t matter if you’re at fault or not.

Property Damage Liability

If you damage someone else’s property by accident with your vehicle, commercial auto insurance gives you protection and a legal defense.

Uninsured or Under-Insured Motorist

In some cases, commercial insurance also provides uninsured motorist coverage. This means it will pay for injuries and damages as a result of a hit-and-run or an uninsured driver.


If your vehicle gets damaged in an accident or by hitting an object, commercial insurance will pay for repairs.

Comprehensive Physical Damage

This insurance provides compensation for natural dangers, such as a flood or fire. It’ll also pay for damages occurred from vandalism or theft.

Non-Owned Liability Coverage

Protects your business when your employees are using their personal vehicles on behalf of you. For example, an office employee runs to the store to get supplies or pick up the mail. This is liability protection for your business, not your employee. Their policy is still responsible for their vehicle plus the damages and injuries to other people.

Who Needs Commercial Insurance?

Companies and self-employed people should get commercial auto insurance for vehicles they drive for business purposes. But these aren’t the only people who need this type of insurance policy.

If you drive a vehicle that is heavier than a normal SUV or pickup truck, your vehicle might require commercial auto insurance. In this case, it doesn’t matter whether you use this vehicle for business or not. This is based on the size of the vehicle, not its use.

Occasionally, we have a client that will purchase a dump truck and will only use it on their property. This is a Not-For Hire status. Since they are not being paid to haul for someone else, this wouldn’t be considered business use. However, due to the type of vehicle, a dump trump will not be allowed on a personal auto policy. This would need to be insured on a commercial auto policy.

Help Understanding Commercial Auto Insurance

Remember, if you are using your vehicle for transporting people or goods for money, you will likely need a commercial auto insurance policy. Everyday activities, such as driving to work or picking up sandwiches for some of your coworkers for lunch, will be covered under a personal auto insurance policy.

Richie Buchanan with ISU Insurance and Investment Group is here to help business owners and individuals in Indiana and Louisville properly protect what is most important to you. If you need to better understand your commercial auto insurance policy, we can help.

Are you looking for commercial auto insurance for your vehicles? Take a look at some of our policies.

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