Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • Business car insurance may provide coverage options that are different from what you’re used to
  • Compared to personal car insurance, a business auto policy may cover a variety of different vehicles or vehicles operated under different circumstances
  • If you are running a business that relies on cars for transportation, purchasing this coverage may be in your best interests
  • Remember that relying on personal auto insurance policies may not be sufficient in the event of a loss
  • Personal auto policies may not be able to meet the financial limits needed in the event of property damage or bodily injury caused at the business’s expense

When it comes to insuring the cars used by your business, purchasing the right coverage to meet your business’s needs is extremely important.

Without the right coverage, your business could be exposed to financial risks above and beyond what it can handle without assistance.

When you are looking to buy a business car insurance policy, make sure to assess your needs, your budget, and how your business uses vehicles before deciding on coverage options.

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Business Car Insurance Compared To Personal Car Insurance

To determine if you need business car insurance, understanding the different between a personal and a business insurance policy is often required.

In many cases, anyone operating a vehicle may carry a personal car insurance policy; these policy types may afford some coverage to a vehicle being used for business purposes.

The determining factor when it comes to a personal policy compared to a business policy is how the vehicle is primarily used. In situations where a vehicle is primarily used for business-related tasks, then a personal insurance policy will often fail to provide any coverage.

Additionally, any vehicle that is owned by the business is unlikely to be covered under a personal auto insurance policy.

Personal auto insurance policies often have lower limits of coverage compared to business auto policies, which means that larger losses may have a bigger effect on the business’s finances.

Also, in the event of a claim or lawsuit, a personal auto policy may not pay for any legal costs or damages that the business is responsible for.

If this was the case, the remaining financial cost could be the business’s sole responsibility.

Without the proper insurance policies in place, anyone involved in a claim or lawsuit could come after the business to get their costs or settlements paid out; this could result in a large financial burden on the business.

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The Coverage Provided By Business Car Insurance Policies

Business car insurance policies may provider coverage that a personal auto insurance policy does not. This is because a business often faces larger risks than the average individual driver.

A business car insurance policy often provides coverage for a variety of vehicles, including ones that are owned by the business, ones that are leased, rented, or hired, and ones that are used but not owned by the business.

If coverage is selected for cars that are not owned by the business, this will normally provide some coverage for personal vehicles being used for business purposes.

Business car insurance policies also provide coverage for physical damages that could occur, including collision related damages, damages not caused by a collision, or unique or named damages. Collision coverage often covers a vehicle when it is involved in an accident with another vehicle.

Comprehensive coverage, or other-than-collision coverage, protects a car from physical damages that are not caused by a collision; hail, fire, and vandalism are all examples of this.

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Remember that named or unique damages is a specific coverage that only protects business vehicles from specifically named incidents, such as fire or theft.

If damages occur that are not named or specified in the policy, then coverage may not apply for the loss.

Liability coverage is a necessary option that may business insurance policies provide; this coverage is also required in many states.

Liability coverage protects an individual or business from financial obligations that could arise from property damages or bodily injuries caused to another party.

These liability coverage limits normally only apply if a covered vehicle is being operated during the accident.

With any business car insurance policy, it’s important to remember that anyone operating a vehicle under your policy could introduce risk.

If a driver is inexperienced or a poor driver and they cause an accident, you will often be liable for any damages or injuries caused.

You will also be responsible for verifying that anyone using a business-owned vehicle is legally qualified to operate a vehicle.



Carrying car insurance coverage that meets your needs, whether they be business-related or otherwise, is important and often legally required.

When it comes to your business, making sure that you can recover from a loss without spending every last penny you have is something you should consider when looking at your coverage options.

By working with your insurance provider, they can help you assess what your business’s risk is; this can help you determine which coverage you should choose.

Also, if you’re trying to determine if your vehicle use may need business car insurance, review the information provided by the Internal Revenue Service on their website.

They provide a wealth of information regarding small businesses and related expenses, which includes information about business car insurance and what may qualify as a business expense.

This can help you determine if purchasing a business car insurance policy or a personal car insurance policy is right for your needs.

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