Difference Between Personal & Commercial Vehicle Insurance

Many people don’t understand the difference between personal and commercial vehicle insurance. At First for Women, we believe in empowering women with knowledge, which helps them make better business decisions. Discover these vehicle insurance insights from our insurance team, and soon, you’ll be able to  differentiate between a vehicle for private use and one for commercial use, and how this affects your insurance policy. Most importantly, you’ll learn why it’s necessary to have the right kind of car insurance. 

 Personal and commercial vehicles: what does it mean? 

While having car insurance is a smart woman’s choice, it’s even more important to have the right type of cover. How you intend to use your car will determine whether you should have personal (or private) car insurance or commercial vehicle insurance. Let’s take a closer look at what it means by a private vehicle and a commercial vehicle.

• A private car is a vehicle you only use for personal and social reasons, which is the majority of most drivers. This includes driving to and from your regular place of employment or home, picking up the kids from school and zooming off to your favourite mall. 

• A commercial or business vehicle is one which is used for business purposes, like making deliveries or visiting a client at their premises. While some commercial vehicles can include taxis, vans, lorries or trucks, it’s important to note that passenger vehicles also qualify as commercial vehicles if they are used for business. Commercial vehicles can be company owned or privately owned. 

Let's paint a scenario: Would your car be covered if you owned your own small business and were using your vehicle to drop off some documents with a client and accidentally caused a motor accident? If you had personal car insurance, you would probably not be covered. However, if you had business car insurance, you would definitely be covered under the comprehensive vehicle insurance plan. 

If you’re still unsure about what constitutes a commercial vehicle, take a look at the guidelines provided by the Ombudsman for Short-term Insurance[1] which include the following: 

• Driving a vehicle to and from business meetings or events

• Operating the vehicle to perform business transactions 

• Going to employer-organised training sessions, meetings or conferences

Since the use of a vehicle affects your risk profile, it’s crucial that you provide your insurer with accurate information when applying for vehicle insurance.

Difference between private and commercial vehicle insurance

The right type of insurance protects you financially whether you own a company vehicle or a personal car. Your risk profile or company risk profile will largely determine the cost of your insurance premiums.

1. Personal vehicle insurance

This comes in three versions: third-party only; third-party, theft and fire; and comprehensive car insurance. 

A third-party only cover plan protects you financially if you accidentally damage someone’s car or property while driving. 

Third-party, fire and theft car insurance offers third-party-only cover benefits and also pays out if your car is stolen or damaged by fire.

Comprehensive car insurance is the Rolls-Royce of car insurance as it covers third-party liabilities and self-caused damages. 

What personal insurance covers

• Loss or damages caused by uninsured third parties

• Accidental damages 

• Loss or damages due to theft or fire

• Damages due to natural disasters like floods

What’s excluded in personal car insurance?

• Loss or damage you cause while under the influence of alcohol

• Accidental damages occurring while using your car for business purposes

• Loss or damage to your car while driven by an unlicensed driver or a non-regular driver 

2. Commercial vehicle insurance

Can you imagine the setback of losing your business vehicle, whether a bakkie, delivery van, or forklift, if you’re uninsured?

Like all types of insurance, commercial auto insurance doesn’t cover every scene or situation. However, it does protect you from most of the common risks you might face as you do business on the road.  Let’s look at what it covers and doesn’t cover.

What commercial vehicle insurance covers

• Loss or damage due to theft, fire, or vandalism

• Third-party liability claims arising from damaging someone’s property

• Medical costs incurred by you or a third party during an accident you cause

• Damage due to natural disasters such as floods and wind

Exclusion in commercial auto insurance

For a detailed list of exclusions in your commercial vehicle insurance policy, check your policy documents. Typically, the following are not included in your cover:

• Damage to tools or goods being transported by your covered vehicle

• Loss or damage when the driver (you or your employee) was under the influence of alcohol

• Loss or damage that occurs when driven by someone not included in the insurance policy

• Loss or damage due to riots, or acts of war

 For more information, take a look at Your top car insurance questions answered by First for Women.

 Why you need car insurance for business vehicles

No one wants to be involved in vehicle accidents or collisions but we can’t turn a blind eye to reality. Between October 2017 and June 2021, South Africa experienced a staggering 37,583 fatal crashes involving 48,330 vehicles[2].

Every business wants to generate profits. High expenses are the major reason some businesses struggle to generate sufficient profits and fail to stay in business. Not having commercial vehicle insurance could hit your business hard if you were left without a vehicle or had to come up with the funds to repair or place a damaged car. 

Another risk you face if you don’t have the right kind of vehicle insurance is third-party litigation related to vehicle accidents. Not only will you have to pay legal fees, but you could end up fixing or replacing someone’s car. Although having insurance doesn’t protect you or your employees from accidents, it covers your business’s bottom line. Most importantly, it provides financial protection to you, your business and your employees. In certain situations, commercial auto insurance may even provide specialised coverage. Just ask your broker. 

Get an online car insurance quote from First for Women

It can be expensive to repair or replace a vehicle, whether it is used for personal or business purposes. That’s why having vehicle insurance is a no-brainer.  Just be mindful that you get the right kind of insurance. With First for Women, you can enjoy peace of mind by getting car insurance for business vehicles or personal use. Start by applying for a free and no-obligations online car insurance quote.

Sources:

[1] Moonstone.co.za: Ombudsman clarifies differences between private, business and commercial insurance

[2] Arrive Alive: Road Traffic Accident Report 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice. First for Women is a licensed non-life Insurer and FSP. T’s & C’s online.