Commercial Use Vs Business Use of Cars : Ultimate Guide

by Business 04 February 2021

commercial use

If you are reading this article, chances are you are a car owner, and you are confused between the two terms of business use and commercial use. So as a car owner, you should be well aware of these terms because not knowing these terms can land you in a lot of trouble.

Not only will it help you to maintain your car more efficiently, and also help you avoid fewer issues with the law. When you buy a car for commercial use, there are a number of other responsibilities that get added to your list apart from just driving, paying the EMIs, and maintaining it.

The thing to note here is that often the two terms are mistaken to be the same. The terms commercial use and business use are totally different. Car owners think that they are the same and hence are not able to implement a lot of things when it comes down to insurance.

What Are The Benefits Of Insuring Your Car For Commercial Use?

There are numerous benefits you get if you insure your car that is specially meant for commercial use. In most countries of the world, insuring a car for commercial use is totally different from insuring a car, which is strictly meant for personal use.

For instance, if you run a business of carpet delivery and the use of vehicles for commercial use is mandatory to run your business. Now you may be wondering why you would insure the vehicles that you do not use for personal purposes.

You are right because most insurers do not give that freedom to ensure your vehicle, which is strictly meant for commercial use. But if you use a car or a truck that you use for both personal use and commercial use, it is always wise to make sure that the car is insured when it is typically used for commercial purposes.

Why Is It So Important To Insure Your Vehicle For Commercial Use?

I am an insurance broker, and I have been in this business for the last fifteen years. I personally recommend insuring your vehicle for commercial use; it becomes quite mandatory in the event of asking for a claim.

In the beginning, if you had bought a car thinking that you would only use it for personal purposes like driving to and from work, but later you joined a profession that requires you to carry stuff on your vehicles,

So technically the car which you bought for personal use has become for commercial use. In the event of such an incident, make sure that you inform your insurance broker.

If you forget to do it or think that it is not necessary, then your insurance company can straight away deny your claim, which may cause you to lose a ton of money. Whether you are using a vehicle for business use or commercial use, it is always important to get them insured.

Business Use vs. Commercial Use in 2021

Even though both these terms are used interchangeably, there is a fine line of difference between Business use and commercial use.

What is Business Use?

When you associate the term ‘business use’ with your vehicle means you are using your vehicle for commuting to and from your place of the profession. A car for business use may include your paper works like your salary sheets, laptop, work samples, portfolios, etc., but it should not contain any supply materials.

The moment it starts having supply materials, it becomes a car for commercial use. Some good examples of a vehicle for business use would be a doctor driving his own car to his chamber to treat his patients or a lawyer driving his own car to meet his clients.

What is Commercial Use?

When you associate the term ‘commercial use’ with your vehicle, it means you are making use of your vehicle while transporting any tools or instrument, or any other material to your place of employment.

Some good examples of vehicles used for Commercial use would be a promoter going to the site of construction, a pizza delivery guy delivering pizzas, a paperboy delivering newspapers on his bike.

Differences Between Business Car Insurance and Commercial Car Insurance?

Suppose you are using your car for your own personal use as well as for business, for instance, if you are a doctor driving your own to treat your patients at the chamber.

I suggest you get a business use car insurance. Getting a business use car insurance is relatively easier than commercial car insurance. You just have to get the standard car insurance

Insurers like me would then be asking you the uses of your car, and you will have to specify the purposes which are achieved by using your car. Upon getting insurance for your business use car, the insurance would be designed in such a way that would cover your work-related driving.

You need commercial car insurance when you are using one or more than one vehicle that is solely meant for conducting business. In the United States, commercial car insurance provides another commercial vehicle that you can use while conducting your business.

Commercial vehicles can include trucks, lorries, and 4WDs. insurance companies are bound to offer third-party damage to property insurance, which is very comprehensive.

What About The Vehicles Used as Cabs?

Insurers typically provide business car insurance if you are contracted with services such as Uber and Didi Dache. You need to tell your insurance company that you are using the car for cab services.

The insurance company may lower the insurance fees and also include a third-party property damage policy.


As a New York-based insurer, in my experience, I have seen a handful of people losing their claim just because they did not inform whether they were going to use their vehicle for business use or commercial use.

Follow this article closely and avoid making such mistakes.

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