You need more protection if you’re under the assumption that business driving is covered by your personal policy

Key takeaways:

  • Your personal auto insurance doesn’t cover your vehicle when you use it for business. 
  • Florida has minimum requirements for business auto insurance, and for commercial auto insurance, special liability requirements.
  • You might need both business and commercial coverage. They are not the same thing, and what you need depends on your type of business. 
  • Commercial insurance covers things like big rigs and delivery vans. Business insurance covers vehicles that drive in regular traffic.
  • Business auto insurance has its own nuances. Some policies cover anyone who drives a company-owned vehicle while others will only cover a particular driver.
  • Both business and commercial insurance cost more than a personal policy due to increased risk.

If you have a business, you likely use a vehicle. You or your employees might regularly pick up supplies or business-related things. Or perhaps you own a restaurant that offers delivery. No matter what the reason, if you use a vehicle for business purposes, it’s important to have the right kind of insurance.

Personal auto insurance does not cover the use of your vehicle for business purposes. A business owner who uses a personal vehicle for company errands or an employee who drives to work meetings or makes deliveries can find themselves out of luck if they are in an accident while doing so. Coverage for vehicles used for business is nuanced, so you want to make sure you are covered correctly.

It’s a legal requirement in Florida to have vehicle insurance. There are minimum requirements and special liability requirements for commercial vehicles. Let’s explore commercial vs. business auto insurance. Hopefully, then you’ll know what’s right for your business.

Why you need business or commercial auto coverage (or both!)

If your vehicle is only covered by a personal insurance policy and is driven by someone else, the other driver is usually covered by your policy. However, business and commercial policies are more precise about coverage. You can get business and commercial policies that only cover specific employees by name. Other policies will cover all company employees.

The danger lies in situations where someone who is not covered by your policy is in an accident while driving a company vehicle. The company likely will be liable for any damage or injury. You don’t want to find this out the hard way, so talk to your agent to become informed. 

The difference between commercial vs. business auto insurance

You might need both types of policies, depending on your type of business. Fundamentally, coverage is the same – you can buy liability, personal injury, and physical damage policies. The difference is in the type of vehicles used as well as how they will be used. 

Unlike your personal policy, which covers you or whoever has permission to drive your car, these other types of coverage often specify exactly who will be covered while driving. Here’s how business and commercial policies differ.

Commercial auto insurance

  • Commercial auto insurance covers specialized vehicles for specific jobs. The State of Florida defines commercial vehicles as vehicles that are not owned or operated by a government agency, AND
  • Use diesel or motor fuel on public highways
  • Have a gross weight of over 26,000 pounds or have three or more axles no matter the weight, or are used in combination for a gross weight of over 26,000 pounds.

Excluded from this definition is any vehicle owned or operated by a community transportation coordinator or by a private operator that provides public transit services under contract with a community transportation coordinator. Only those with a commercial driver license can operate commercial vehicles.

Where these vehicles drive and what they contain makes a difference in the amount of liability coverage required. Keep in mind that these are all minimums, so talk with your agent about your specific situation to make sure you have the coverage necessary to protect yourself, your employees, and your business. 

If driving only in the State of Florida, these are the minimums you will need:

  • For oil transport – $1 million
  • For hazardous materials – $5 million
  • For household goods – $300,000
  • For general freight – $750,000

If your trucks drive out-of-state, your liability coverage must meet Department of Transportation insurance requirements as outlined by the Federal Motor Carrier Safety Administration:

  • Public liability, which includes bodily injury, property damage, and environmental restoration:
    • For freight: $750,000 to $5 million, depending on what’s being transported, and $300,000 for non-hazardous freight moved in vehicles under 10,001 pounds.
    • For passengers: $5 million or $1.5 million for those operating vehicles that see 15 passengers or fewer. 
  • Cargo insurance for household goods: Carrier – $5,000, and for a freight forwarder, $10,000 per occurrence.
  • Surety bond: $75,000  for a freight forwarder and a $75,000 trust bond for freight brokers.

Business auto insurance

Business auto insurance has a lot in common with commercial insurance. You still need policies for liability, personal injury, and physical damage. However, there are some important differences. A business auto policy is for ordinary vehicles used in regular traffic. Some business policies also only cover specifically named employees while others cover anyone who works for your company.

It’s important to talk to your agent about which type of coverage you need. For example, if you own a pizza parlor with branded vehicles, you might want any of your delivery drivers to be able to use them. Or you may supply company cars to particular employees and only they would be named on the policy. Does a commercial or business policy cost more than a personal auto policy? Yes, and here’s why.

Why a business or commercial auto policy costs more than a personal policy

It’s all about risk. There’s an expectation that a personal vehicle will be driven fewer miles than a commercial or business vehicle. Businesses operate for more than a traditional eight-hour workday. Every extra mile driven adds a layer of risk. This makes commercial and business policies more expensive because of the great risk of accidents.

Commercial coverage is more expensive than business coverage. A car driven by a real estate agent or courier moves in normal traffic. Commercial vehicles are also used more frequently. Vehicles like buses and 18-wheelers also are far larger than other vehicles on the road. This makes it difficult for them to remove themselves from dangerous situations fast, which increases the risk of damage.

When it comes to commercial vs. business auto insurance, your agent is your best source of information. Deciding what you need and who you need it for can be complicated. Lawsuits that arise from the lack of proper insurance and proper policy limits could put you out of business, so make sure you’re covered.

Don’t drive yourself out of business – Call Avante today!

Don’t risk your business by operating without the right commercial or business auto policy. Make sure you and your employees are completely and properly covered. At Avante, we’ll work with you to build the complete coverage you need with a deductible that works for you. Reach out today because you never know what tomorrow will bring. 

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.