Is Car Insurance Cheaper for Commute or Pleasure?

When searching for an auto insurance policy and getting multiple quotes, a highly common question you will hear is, “what is your vehicle’s primary use?”

When you hear this question from an agent, don’t think they are trying to trick you into paying more money for your auto policy. They are trying to ensure they classify your autos correctly. The reason this is so important boils down to if you get into an auto accident.

If your auto’s primary usage is incorrect, your insurance carrier is well within their right to deny your insurance claim. Knowing the proper primary usage for your cars can save you money, but can also limit the chances of your auto insurance claim getting denied.

Commercial vs. Personal Usage

The lines between business and personal usage can get blurred if you do not know what you are looking for. We will get into that relationship shortly. However, the lines between commercial and personal usage are much easier to decipher.

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If a vehicle you are driving has any of the following characteristics, you need a commercial auto insurance policy, whether you want it or not. They tend to cost a little more than a standard auto policy.

Furthermore, you are taking a massive chance of covering this auto with a personal auto insurance policy. If you get into an accident with a vehicle with any of the below points, and you have a personal auto policy on the car, once the claims adjuster quickly figures this out, there is a high chance the claim will be denied for misclassification of primary usage. And, you will not get any of the premium dollars back you had been paying for the incorrect policy you had.

  • If the auto is registered and owned by a business. 
  • If only employees of a company drive this car. 
  • If the auto is frequently carrying work equipment to and from job sites.
  • If the auto is the actual business, this includes a taxi, limo, carrier service, etc. 
  • If the auto has special “aftermarket” equipment professionally attached. Items such as snowplows, cranes, winches, or lift-gates. 

If the car you drive has anything close to the above characteristics, you need to call your agent right away and explain your primary usage to them and let them help you decide if a commercial auto policy is the best option for you over a personal one.

Business vs. Personal Usage

As mentioned before, the lines between business and personal usage can get blurred rather quickly for a driver if you are not aware of the insurance guidelines. This section here might be easier to explain with a scenario.

Let’s say you are a real estate agent and need to drive clients around from home to home for showings. This would still be considered personal usage and not business usage.

Why?

The reason being, as a real estate agent, the insurance carrier knows that driving clients around from home to home is not the actual job. The job is to show and sell homes, and driving clients from home to home is integral to the role of a real estate agent. They know you are not a limo, Uber, or a Lyft type of service.

Business Usage

When trying to decide if you are driving your auto for business over personal usage, there are some exceptions to this rule. If you have a part-time job that’s the primary purpose is not dropping off, or transporting any products, but you occasionally do this task on a minor scale. Chances are, you will be fine doing this on your personal auto policy.

However, if this becomes a full-time job, or dropping off, and transporting products increases to a significant scale. You will need to speak with your agent as they might want you to switch your policy to a business or a commercial auto policy.

Pleasure vs. Commuting

Not much to get blurred here. Pleasure versus commute driving boils down to two things. How you are using the vehicle and, most importantly, mileage.

If you drive your auto to work, school or any place where the vehicle is left somewhere for hours is a good indicator. Also, if on that same day, you use that same vehicle to take you back to where you were before the day started, this auto is being used for commuting purposes.

If you only drive the auto a few weekends per month, and the car spends much of its life inside a garage or covered with a tarp. Or, if the automobile has license plates that have the words “Classic” on them, this vehicle is being used for pleasure usage.

Lastly, an effortless way insurance companies can tell if a vehicle should be listed as pleasure over commute is miles driven. The rule of thumb is if the auto is driven 7,500 miles or less per year, this vehicle should be classified as a pleasure usage vehicle.

The Mileage Factor

When an insurance company is determining if your auto is being used for pleasure or commuting, they first turn to you for the answer more times than not. This is when they flat out ask you, “What is your vehicle’s primary usage?” Most insurance companies do it this way. However, some insurance companies’ guidelines do not allow them to take your word for it. They ask for the vehicle’s mileage and track how many miles you are driving each year.

In California, more than any other state, they do not take policyholder’s words on primary usage. They use the miles you drive to determine your insurance premium. They have a database for the state that keeps track of all the autos in that state’s miles driven per year. During the quoting process, they still might ask you for your mileage, but will 100% even check it to make sure you told them the truth.

Why Is There A Price Difference For Pleasure VS Commuting Autos?

It all comes down to risk and probability. The more you drive your car, the higher chance you have of getting into an accident, and the insurer having to cut a check for auto damages. The less you drive, the lessor risk of you getting into an accident, and the insurer doesn’t have to cut a check.

Insurance carriers do not want to cut a check if they do not have to. However, they are not stingy either. If you drive less, they will gladly pass on those savings to you in the form of an auto discount. This is why there is a price difference.

Cost

Everyone loves saving money, even if it is only $1. There are hundreds of auto insurance carriers, and they all have different pricing structures. This is how you can research and find the cheapest or the most expensive carriers on the market. However, when your auto is determined to be a pleasure and not a commuting vehicle, the savings can be upwards of $11 per year. If you have more pleasure autos, this number can increase.

Final Thoughts

Different insurance carriers place the importance of pleasure versus commuter autos very differently. Some insurers do not provide much of a discount at all, while someplace a broader emphasis, and discount primary usage.

If you are with a carrier and feel you are not getting what you think you deserve, or you’d like to see if there are any better carriers out there. Or, you’d like to find a carrier that provides a larger discount for primary usage, please contact the experts SureBuyCarInsurance at 855-838-6093 today. Our licensed insurance experts are standing by to search the insurance market on your behalf.