Business car insurance covers claims resulting from accidents involving vehicles used by your business. Coverage commonly includes liability protection for bodily injury and physical damage but may also include coverage such as collision and medical payments. Depending on the carrier, company car insurance costs $600 to $2,400 per vehicle annually.
Consider Progressive Commercial for your business car insurance needs. Progressive makes it easy for small business owners to get a quote online and save on commercial auto insurance with multiple discounts.
How Business Car Insurance Works
Business car insurance covers situations when a business vehicle you’re driving gets into an accident or when your business vehicle is damaged by some other means, such as weather or vandalism. Business owners who rely on vehicles to conduct their operations, such as regularly visiting clients, making deliveries, or transporting people, need business car insurance.
You can obtain business car coverage for a single vehicle or a fleet. A business car policy may include different types of optional coverage, allowing you to customize policy coverage to your business’s needs. If your business vehicle is damaged by weather, an accident, or another occurrence, you can file a claim to cover the cost of repairs. Your business car insurance can help cover the costs of the claim, up to the limit of your policy.
Who Business Car Insurance Is Right For
Determining if you need a business car insurance policy can be difficult. It’s possible you might need company car insurance even if you use your personal vehicle for work purposes other than commuting. Additionally, to determine if business car insurance is right for you, it helps to examine who owns and drives the vehicle, how the vehicle is used, the type of vehicle, and if your business has other special needs when it comes to vehicle use.
You might need company car insurance if you:
- Drive your personal vehicle for business
- Own a vehicle registered to your business
- Have employees who drive company vehicles
- Deliver goods or property using a vehicle
- Work as a rideshare driver
- Transport equipment or property for business use
In most cases, your personal auto policy does not cover business-related driving. In some cases, insurers allow you to add an endorsement to your personal policy to include some business use of your vehicle. Some carriers might allow you to add a personal use endorsement to a commercial auto policy.
How do you identify the fine line between whether you need personal auto insurance or business car insurance? Use these examples to see where your coverage needs may fall:
Personal Auto Insurance vs Business Car Insurance
Personal Auto Insurance
Business Car Insurance
Picking up morning coffee for coworkers
Driving to meet clients or visit a job site
Driving friends to the movies
Transporting people as a rideshare driver
Going camping on the weekend
Delivering flowers to paying customers
Commuting to your office
Transporting business property regularly to your worksite or office
Read your auto policy carefully or consult with your agent to ensure you understand the coverage and exclusions of your specific policy.
Business Car Insurance Examples
Companies of all sizes need vehicles to conduct business in different ways, but it’s not always clear what type of company car insurance you might need. Here are some examples to help illustrate various uses of business car insurance.
Businesses That Own Vehicles for Work Use
Say you own a moving company with a large fleet of trucks to transport and haul customers’ belongings nationwide. Business car insurance, or semi-truck insurance, is necessary to ensure your company is covered—especially if you’re moving third-party property across state lines.
Proper coverage helps you meet legal requirements and lends credibility to your business.
“The governing authorities are enforcing certain grade of carriers to provide coverage to moving companies. They must be filled out once a year and audited both on state and federal level. The insurance grade of the carrier is important because it provides a proof on liability to the building management company.”
—Lior Rachmany, CEO & Founder, Dumbo Moving
Businesses That Use Personal Vehicles
Now, imagine that you’re a jack-of-all-trades handyman, taking on home projects both big and small. You drive your personal van to get from client to client. Because you’re using a personal vehicle for work-related purposes like traveling to worksites and transporting tools, you need business car insurance to cover your liabilities.
The same will apply if your business has employees who use personal vehicles for work trips like a landscaper who hires seasonal workers who use their personal trucks for business-related activities. In that case, you need company car insurance to cover you and your employees while they’re driving on behalf of your business.
Businesses That Hire or Rent Vehicles
Business car insurance is a good idea even if all you do is rent or hire autos. For example, let’s say you own a consulting firm that brings in specialty contractors to assist with client projects, and you rent a car to help them get around. Because you rent or hire vehicles for business purposes regularly, you may need to be hired and nonowned auto insurance to cover liability claims resulting from accidents involving these vehicles.
Business Car Insurance Costs
Commercial auto insurance cost depends on several factors, including how much coverage you need and the number of vehicles your business uses. Policies for one car typically cost less than policies for a vehicle fleet. Most small business owners can expect to pay an annual premium of $600 to $2,400 per vehicle.
Business Vehicle Insurance Costs By Vehicle Type
Many businesses only insure one car, which helps to keep premium costs low—around $2,400 or less. Generally, a passenger vehicle costs much less than a heavy-duty vehicle, such as a semi-truck. Specialty vehicles, like a food truck, might need customized coverage. Carriers may also offer fleet insurance, and these policies are typically available at a discount.
According to John Espenschied, owner of Insurance Brokers Group, commercial auto insurance is typically 50% or more than a personal auto policy with comparable liability limits.
Factors that determine the cost of company car insurance may include:
- Vehicle make, model, and year: Often, heavy-duty vehicles need more coverage.
- Vehicle value: Expensive cars are more costly to repair so insuring them costs more, too.
- Number of vehicles and drivers: More cars and drivers creates more risk that requires additional coverage.
- Driving records: Employees with bad driving records typically cost more to insure.
- Distance traveled: You might see higher company car insurance costs if your regularly drive great distances.
- Coverage options: Adding optional business car coverages increases the overall cost.
- Vehicle use: Whether you’re hauling goods or making deliveries, your driving activities influence the cost.
- Claims history: If your business has a clean or low claims history, you’ll likely have lower premiums.
Your business car insurance costs are affected by your liabilities, the potential loss in the event of an accident, and other factors. Revisit your company car insurance policy routinely to make sure you meet all of your business insurance needs.
Company Car Insurance Coverage Types
Company car insurance comes with liability coverage for third-party bodily injury and property damage when you or an insured employee is at fault in an accident. Small business owners can also add first-party coverage, such as medical payments and collision and comprehensive.
Business car insurance coverages typically include liability, medical payments, uninsured and underinsured motorist, collision, comprehensive, and roadside assistance.
If you or an insured driver are at fault in a collision, liability covers your business for third-party injuries. If your business is found liable for an accident, liability coverage can help pay for the injured party’s medical bills, repair costs, and accident-related legal expenses, such as attorney fees or settlement costs.
After an auto accident, medical payments (MedPay) can help cover medical expenses for you, your insured driver, and your passengers. This may include hospital and doctor visits, surgery, X-rays, and ambulance fees. MedPay is no-fault coverage, meaning no matter who is liable for the accident, your insurer pays for a covered loss up to the insured amount.
Uninsured & Underinsured Motorist
Uninsured and underinsured motorist (UM/UIM) coverage can help pay for you or your insured driver’s losses when a driver with little or no auto insurance causes you bodily injury or damage to your vehicle.
Collision coverage helps pay for repairs or the replacement of an insured’s business vehicle after impact with another car or object, like a tree or pothole, causes physical damage. Damage to your vehicle is not included in liability coverage.
Comprehensive coverage helps pay for repairs or the replacement of an insured business vehicle if an event other than a collision causes the physical damage. Covered instances might include vandalism, theft, fire, natural disasters, falling objects, hitting or being hit by an animal, and windshield damage.
This coverage can compensate your business for incurred expenses when your insured vehicle requires roadside assistance, including towing, fuel, lockout, or other services needed to get you back on the road. Conveniently, roadside assistance is typically available 24/7, 365 days a year.
Pros & Cons of Business Car Insurance
There are several essential benefits that business car insurance can offer, but it may not be right for every business or situation. A sole proprietorship or microbusiness are going to have different needs than a company with many employees. Learn about some of the pros and cons of company car insurance.
Pros of Business Car Insurance
The advantages of business car insurance include:
- Being compliant: Business car insurance ensures your business is compliant with local and state laws that typically require car owners to carry at least liability coverage.
- Protecting your business: Any time that you or an insured driver is behind the wheel of a business-owned vehicle, you risk paying for damages if there’s an accident. Company car insurance protects you from this cost.
Cons of Business Car Insurance
The disadvantages of business car insurance include:
- Paying premiums: Business car insurance is more expensive than personal auto insurance because it’s considered riskier, resulting in higher premiums. Look for carriers that offer discounts and bundling options for small business owners.
- Being overinsured: Company car insurance provides coverage for you and any insured drivers, but it’s possible to be overinsured. Talk to an agent to make sure you have only the coverage you need.
Despite the expense, business car insurance is a necessity for most small businesses. Nearly every state legally requires a minimum amount of liability coverage for all drivers on the road.
Additional Company Car Insurance Coverage Types
In some cases, company car insurance may not cover every situation or all of a business’s driving-related operations. Small business owners may need additional policies to meet their unique risks.
Hired and Nonowned Auto Insurance
Hired and nonowned auto covers third-party injury and property damage caused by vehicles rented or hired for business. It also protects businesses that have employees use personal vehicles for work purposes. If your employee gets in an accident while running business errands in their personal car, hired and nonowned auto insurance offers coverage.
Personal Car Insurance
If most of your business activities don’t require driving, you may not need business car insurance. Let’s say you offer accounting services online while working from home. With no need to visit clients, you likely won’t be doing much business-related driving so your personal auto policy probably can suffice.
Rideshare & On-Demand Delivery Auto Insurance
If you work for a rideshare company like Lyft or Uber or an on-demand delivery service like DoorDash or Postmates, your personal auto policy typically does not cover these driving activities. Some rideshare and on-demand delivery companies offer drivers company car insurance, but it may not protect you and your vehicle in all instances. A rideshare insurance policy might be a better fit to ensure you have adequate coverage.
Inland Marine Insurance
If your business frequently ships or transports property, tools, or specialized equipment, you might need inland marine insurance. This policy covers products, materials, and equipment when transported on land. Inland marine insurance is particularly important for covering high-value products, which are typically excluded by basic property coverage.
Tips on Getting Business Car Insurance
Applying for business car insurance can be complicated because the requirements for businesses vary widely across location and industry. You don’t need to be an insurance expert to find the ideal coverage at the right price, but there are a handful of important steps to take that can make applying easier.
Here are four things to remember when getting company car insurance.
1. Get Only the Coverage You Need
Many business owners try to get by with the bare minimum of coverage they need to satisfy legal requirements, but that may not provide enough protection for your company. Regardless of whether or not vehicles are part of your core operations, work with an expert to ensure you have adequate coverage. In some cases, a personal auto policy may fit your needs.
“Business owners may find that their personal auto policy excludes business use altogether, or they may not be covered if the vehicle they’re driving has signage. While commercial auto covers you explicitly for business use, personal use can be added as well. There’s usually no need to have both a commercial and personal policy.”
—Brandon Gehring, Agent, Insurance Werks Services
2. Gather Your Information Before Applying
Before beginning your search for business car insurance, gather all of the necessary information about your business. Having the proper documentation on-hand makes the process easier and helps providers figure out how much company car insurance your business may need. Include all details the application requires to ensure all your risks are covered properly.
Information needed when applying for insurance may include:
- Address and business location
- Business industry
- Number and types of vehicles
- Purposes for work-related driving
- Driving history of you and your employees
- Information on other insurance coverage you already have
- Claims history—at least the past three years
3. Work With a Carrier That Knows Your Industry
Business owners need to consider their industry while shopping for company car insurance. While most commercial auto policies are similar, you should work with an insurance carrier that is familiar with your industry’s unique risks to anticipate your needs better.
4. Keep an Eye Out for Coverage Gaps
While you’re researching your options, be sure to pay attention to possible gaps in coverage. That might include exclusions—the risks not covered in a policy, or it may be a lapse in coverage if you had an existing business car insurance policy then dropped it or didn’t renew it. Some providers exclude certain risks from policies to reduce the cost, but the result may mean claims you think are covered end up being denied. Ask insurers to advise if you need to add a rider, or supplemental coverage, to your business policies.
Business Car Insurance Frequently Asked Questions (FAQs)
Determining if business car insurance is right for your business can be a confusing process. Here are a few of the most commonly asked questions.
Do I need business car insurance if I have a personal auto policy?
Most personal auto policies do not cover work-related driving. However, some carriers allow you to add an endorsement to your personal policy to include some business use of your vehicle or vice versa—you might be able to add a personal use endorsement to a commercial auto policy.
How much company car insurance coverage do I need?
Insurers typically recommend a company car coverage limit of $1 million with $500,000 as the minimum. A higher limit doesn’t always add a hefty amount to the premium, so it’s often worth it for the additional protection.
Is business car insurance tax deductible?
In many cases, you can deduct the cost of business car insurance for tax purposes if you use your vehicle for business use. Consult with an accountant or a tax advisor for advice on how to properly deduct this expense.
How can I save money on business car insurance?
Ask your insurer for discounts that may be available to you, such as bundling a commercial auto policy with your other business insurance. Additionally, you can lower your premiums by keeping a clean and safe driving record and ensure all your business vehicles are well maintained.
Business auto insurance is needed for any small business using a vehicle in their business, whether the vehicle is owned, rented, or borrowed. If you or your employees drive a vehicle for work-related purposes, your business needs at least liability coverage in the event of an accident. Work with an insurance agent experienced with company car insurance to help you find which type of policy is right for your business.
Progressive Commercial offers small business owners free online quotes and access to experienced representatives who can help you save on business car insurance with multiple discounts.