When it comes to insuring a vehicle, the type of policy you need depends on how you use the car. But there are situations that can blur the line between personal and commercial car insurance. Here’s what you need to know about company car insurance policies compared to personal car insurance, what they cover and how to pick the right coverage for you.
Key difference of company car insurance and personal car insurance
The main difference between company and personal car insurance is in how the vehicle is used.
Company car insurance, also known as commercial auto insurance, is a policy designed to protect vehicles used for business purposes. Delivery vans, trucks, rental cars, rideshare vehicles and even personal cars used for business purposes can be covered under a commercial auto policy.
A company car policy typically provides broader coverage and higher liability limits. This is because cars used for business purposes are often exposed to greater risks. A company car insurance policy often covers multiple drivers and vehicles under a single plan.
Unlike a personal car insurance policy, the owner of the policy is the business entity who owns or leases the car and not the individual operating the car. This means that the company is responsible for paying insurance premiums in most cases.
On the other hand, personal car insurance covers individuals. A personal car insurance policy will also typically cover household family drivers. In most states, personal car insurance is required for drivers. Personal car insurance policies explicitly do not allow business use of an insured vehicle, except with an endorsement.
Company vs. personal car insurance: Policy coverage
Company and personal car insurance cover different things in different situations. Which insurance is right for you depends on what the vehicle is used for.
| Company car insurance | Personal car insurance |
| For business use only | For everyday driving only |
| Company owned | Individual owned |
| Covers multiple employees or drivers | Covers policyholder and immediate household family members |
When do you need both commercial and personal auto insurance?
Some drivers need a combination of personal and commercial car insurance. For example, rideshare drivers will typically need personal coverage for everyday use and commercial coverage when transporting passengers or goods.
A personal car insurance policy will not cover business use of a vehicle without a special endorsement. Many insurers offer business-use endorsements that provide commercial coverage when a driver is using their vehicle for business.
How to choose the right policy
Choosing between a personal or company car insurance policy depends on how your vehicle is used. Commuting and daily driving requires a personal car insurance policy, whereas business uses like transporting clients or moving equipment require company car insurance policy.
If the company owns or leases the vehicle, the company needs to have a commercial car insurance policy that covers it.
Personal car insurance policies may also cover certain business uses, like driving for a rideshare company, with a specific endorsement. This endorsement provides coverage when you’re logged into the rideshare app and working.
When getting insurance, always be transparent with your insurer. If you misclassify your vehicle use, the insurance company may deny your claim in the event of an accident. When in doubt, ask your insurance company or agent about what coverage you need for your use.
Conclusion – Company car vs. personal car insurance
The difference between a company and personal car insurance policy lies in how the insured vehicle is used. A company car insurance policy is designed to protect businesses that use vehicles as part of their operation. This often comes with higher liability coverage and can cover multiple employees or drivers. Personal car insurance policies cover individuals and their families for non-business use of a car. Rideshare and small business drivers often fall somewhere in between, requiring both types of policy or an endorsement for a personal policy.
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