The difference between insuring your work vehicle(s) under personal or commercial cover may not appear much, but the deeper you look, the more they diverge.
Here’s why it’s important to know what distinguishes these policies. This will help you secure the correct cover to protect your assets.
How are personal and commercial car insurances different?
Personal vehicle insurance is for individuals and covers the nature of the use of the vehicle with limitations on cover where the vehicle is used for reward. Conversely, business or commercial vehicle cover protects vehicles used for:
- Transporting equipment or goods
- Driving staff or clients or visiting your clients
- Performing a service for which you’re paid
- Charging passengers a fee when they ride in your vehicle
- Charging a fee to transport goods in your vehicle
- Hauling heavy, work-related loads
- Towing a trailer used for business.
Typical business/commercial vehicles include sedans, utes, vans, trucks, forklifts, towed wood chipper, pet-grooming trailer, tractor, ride-on mower, and trailers, etc.
Commercial vehicle policies cover an entire business, whereas a personal policy would cover you as the driver of your own car, as well as other nominated drivers such as your partner or children.
Why does commercial insurance cost more?
Understandably, there are greater risks associated with having a commercial vehicle on the road and worksite. That’s because they tend to be used more, often in heavier traffic, and on unfamiliar roads and conditions, etc. As well, commercial vehicle insurance usually has a higher claim limit and gives you options for extra coverages that aren’t available for personal vehicle insurance policyholders.
No surprises then, that premiums are higher for commercial rather than personal vehicle insurance, but even then, the price will vary depending on vehicle use. Here’s why premiums may differ:
- Your industry’s risks
- The number and type of vehicles your business owns
- How often they’re driven
- Your employees’ driving records
- Your choice of coverage, including policy limits
- Your motor vehicle insurance claims history.
What should my commercial vehicle insurance include?
We’re assuming you’ve already secured compulsory third-party/green slip insurance, the mandatory cover for driving on Australian roads.
You can opt for commercial vehicle insurance as either part of your business insurance package or as a stand-alone product for a group of vehicles – often up to 20 – under a single policy. That means you won’t need an individual policy for each vehicle – quite a time saver! As a bonus, you can opt for ‘automatic inclusions and deletions’ to add new vehicles as you buy them and remove ones you’ve sold during the policy period.
Here’s what to ensure is included in your commercial vehicle policy:
- Legal liability should your vehicle damage another (usually up to $30 million coverage)
- Damage that uninsured drivers cause to your vehicle
- Fire or theft of your vehicle
- Choice of repairer
- Lifetime guarantee on repairs the insurer authorises
- A swift and easy claims lodgment process
- An option to pay monthly, quarterly, or annually, plus
- Extras such as new-vehicle replacement (at market value, agreed value, or sum insured), hire vehicles while yours is out of action after an accident, lease payout, and windscreen excess waver.
In essence, commercial vehicle cover aims to help your business get its set of wheels back on the road again after an accident. We can advise you on the options available to customise the best-fit cover.