On average, commercial auto insurance is more expensive than personal auto insurance. This is because work vehicles insured with commercial auto insurance often face higher risk of liability and property damage than personal vehicles.
What is a Commercial Vehicle?
A commercial vehicle can be almost any type of vehicle so long as it is used for work purposes or owned by a business. Common commercial vehicles include pickup trucks, company cars, vans, eighteen wheelers, buses, etc. If the vehicle is built to carry passengers or equipment, or is over a certain weight limit, it may be automatically categorized as a commercial vehicle.
For example, say you are a contractor who uses a van to transport your equipment between clients. This would qualify as a commercial vehicle and need to be covered under commercial auto insurance.
Essentially, the main difference between a commercial vehicle and a personal vehicle is use. If you simply use your vehicle to commute to and from work, your personal auto insurance policy should cover you. If you frequently transport people and equipment, travel for work, or take clients out to lunch, however, you may need a commercial auto insurance policy.
There are some differences in coverage offered depending on the vehicle, however. Commercial vehicles often have higher liability limits available, especially those that transport people or hazardous materials.
Average Cost of Personal and Commercial Auto Insurance
For a full coverage commercial auto insurance policy, business owners may pay between $750 and $1,200 each year per vehicle. The average cost of a personal auto insurance policy is closer to $1,555 per year. This comparison can be misleading, however.
Commercial auto insurance is usually more expensive than a personal auto insurance policy due to the risks, the size of a business and the number of insured vehicles. If you have more people sharing a vehicle, you will likely pay more due to the increased risk. These prices also depend heavily on your location, driving record of all drivers, claims history and more.
Be careful when choosing between a personal auto insurance policy and a commercial auto insurance policy. Choosing the wrong one can leave you without coverage when you need it most. If you insure your vehicle with the wrong policy, such as insuring a personal vehicle with commercial auto insurance, you could even be dropped by your insurer.