Commercial auto insurance is an important policy for any business with vehicles and is required if your business owns a vehicle—covering damages and injuries from accidents. The damage can be to other vehicles or property and even the cost to clean up a crash scene. This type of insurance can include multiple coverages for first- and third-party damages and injuries. Commercial auto insurance costs can range from $800 to $2,900 per car annually.
Key Takeaways:
- First-party refers to your vehicle’s damages, downtime (rental), and any injuries in your vehicle with medical payments. Insurers also offer first-party coverage for your vehicle, such as collision or comprehensive.
- Third-party refers to other vehicle or structure damage, injuries in another vehicle, or your passengers when the driver of your vehicle is at fault. Third-party liability coverage for injuries and property damage is required in most states.
- Some insurance companies will offer a form of business interruption for your business if you are losing income while the car is in the shop from an accident.
Regardless of the type of vehicle or number of vehicles your business owns, Nationwide is an insurer you can trust to help you get the coverage you need. It has decades of experience in the commercial auto space and can insure any size vehicle, from a personal auto up to a fleet of semitrucks.
Who Needs Commercial Auto Insurance?
Any business owner who uses their vehicle for work purposes should have commercial vehicle insurance. If you own, rent, or hire a vehicle for work, you should have commercial auto insurance.
Here are examples of when businesses need commercial vehicle insurance:
- Delivery drivers
- Rideshare drivers
- General contractors
- Tradespeople
- Caterers
- Food trucks
States regulate how personal and business use is interpreted in the policy. In some states, using your personal vehicle to visit clients regularly is considered coverable with personal auto, whereas in other venues, it will be an exclusion. It is important to review your vehicle usage with your carrier to determine the best policy.
Is Commercial Auto Insurance Required by Law?
Most states require vehicle personal or business owners to carry the state minimum limits for liability. Some states also mandate first-party injury coverage and uninsured/underinsured motorists. New Hampshire and Virginia are the only two states that allow owners to not purchase business auto insurance. However, both states require you to demonstrate financial sufficiency to pay for losses involving your business vehicles.
Commercial Auto Insurance Costs
Costs for commercial auto insurance vary depending on several factors. Policies for one car, which are the following quotes, cost less than policies for multiple vehicles or a fleet.
Vehicle Type | Average Annual Premium |
|---|---|
Commercial Vehicle | $800 to $2,900 |
Delivery or Cargo Van | $3,790 to $6,900 |
Limousine | $4,600 to $11,500 |
Taxi | $5,750 to $11,500 |
Semi-truck (Owner-operator) | $9,200 to $14,400 |
Insurers consider many factors when calculating a premium. Some of the primary factors that determine commercial auto insurance costs include the following:
- Vehicle type: A heavier, larger vehicle will need higher limits because of the potential harm it can cause in an accident.
- Vehicle value: The premium for physical damage is often a percentage of the vehicle’s value, so higher value translates to higher premiums.
- Number of vehicles and drivers: The more vehicles and drivers you have, the greater the risk of an accident, and thus, usually more coverage and a higher premium.
- Coverage: The types of coverage, insurance endorsements, and limits chosen will impact the premium.
- Deductible: In line with the above, higher deductibles mean lower premiums but also more out-of-pocket expenses when you have a loss.
- Distance traveled: Long trips, especially those that cross state lines, add to commercial auto insurance costs.
- Cargo type: If you haul cargo, risk and premiums are usually lower if you’re hauling hay than hazardous materials.
- Loss history: Accidents and tickets will increase the premium.
Commercial Auto Insurance Coverages
These are the most common coverages for commercial autos. Please note that some insurers offer a single coverage for liability with a combined single limit for both bodily injury and property damage.
Coverage | What It Covers | First Party or Third Party |
|---|---|---|
Bodily Injury | Third-party medical expenses and defense costs when you or your insured driver are at fault | Third |
Property Damage | Third-party property damage (vehicle, vehicle contents, or structure) when you or your insured driver are at fault; also provides a rental for the other party | Third |
Medical Payments | Medical expenses for anyone in your vehicle who is injured, regardless of fault | First |
Uninsured/Underinsured Motorist | Medical expenses and vehicle repairs after your car is involved in a loss with a driver who is uninsured or doesn’t have enough insurance | First |
Collision | Repair cost or replacement for your vehicle if it is damaged in a collision | First |
Comprehensive | Repair cost or replacement for your vehicle if damaged by events other than a collision, including hitting an animal | First |
Roadside Assistance | Expenses for roadside assistance required by your vehicle | First |
Rental or Loss of Use | Provides rental cars when your vehicle is nondrivable from an accident; typically has a daily and maximum limit | First |
Additional Business Insurance for Vehicles
While the above coverages are the most common, there are other coverages that your particular business may need to consider.
Auto policies only cover what is considered to be part of the vehicle, usually defined by it being permanently installed. If you have tools, equipment, or other business items in a vehicle that become damaged or lost when the vehicle is stolen, the auto policy usually will have no coverage for those items.
Inland marine is a separate policy for tools and equipment. The coverage follows the equipment around, so it isn’t limited to a specific location. Some industries that should consider inland marine are:
- Contractors
- DJs
- Photographers and videographers
If you haul freight or cargo, cargo insurance is a type of inland marine insurance.
When you operate a business where people leave their property in your care, custody, and control, you become liable for it. A commercial auto policy doesn’t cover customer vehicles and for that, you will need a garage keepers policy. This can be purchased as a standalone policy or is usually available as an endorsement for general liability insurance.
Businesses that may need this policy include:
- Auto repair shops
- Tow truck operators
- Auto glass installers
- Detailing operations
- Auto restoration
If you’re a tow truck operator, you should consider on-hook towing insurance to help pay to repair or replace a vehicle damaged while you are towing it. Other businesses, such as car haulers and truckers, may need this too.
Typically, three to five vehicles are the minimum requirement to be eligible for fleet insurance. If your business has several sedans and multiple dump trucks, fleet insurance covers all the vehicles under one policy.
Commercial Auto vs Personal Auto Insurance
While the coverages have the same name and function, there is a difference between personal auto and commercial auto insurance. The primary difference is usage: personal auto policies exclude business-related driving, especially if the driving occurs regularly.
Depending on the policy language, if you only occasionally drive your vehicle for business purposes, there may not be a coverage issue on your personal policy. However, if it is done regularly or you have dedicated vehicles for work, you need a commercial auto policy.
Rideshare Insurance
If you have a side hustle of driving people around or picking up food orders and delivering them, your personal auto policy will not have coverage for your vehicle. That’s because, during those moments, your vehicle stops being a personal vehicle and becomes a commercial vehicle.
While it may seem confusing that you need rideshare insurance when you drive for, say, DoorDash, that is an umbrella term for any type of Transportation Network Company (TNC) like Uber or Instacart. You have a few options in this type of situation:
- Speak with your company about endorsements. Some insurance companies now offer rideshare endorsements. If they do, then this is the simplest way to ensure you have coverage.
- Look into a commercial auto policy. You can use your business vehicle for personal use without voiding coverage, but you cannot use your personal auto for business use and have that coverage apply.
Frequently Asked Questions (FAQs)
Yes, commercial auto insurance is a coverage that is required by states. Usually, the only required coverage will be liability. However, if you have a loan on a vehicle, the lending agency will usually require your business to carry first-party coverage.
Comparative negligence means that it is possible that both parties contributed to the loss. So, depending on the state, this means your carrier may end up covering part of the loss for the other party and vice versa.
Claims are to be resolved in a timely manner. However, insurance carriers must also do their due diligence in reaching all parties involved. Typically, the biggest factor in a claim’s time delay is when the carrier has trouble reaching all of the involved parties to obtain a statement. Obtaining the statement may be necessary to clear coverage, investigate liability, or both.
There is no such thing as “full coverage.” Even if you have purchased every type of insurance available for your vehicle, exclusions will still apply.
Commercial auto insurance can be purchased through an insurance agent, a broker, or a provider. If you are ready to buy or want to get some quotes, we’ve put together a roundup of the best commercial auto insurance companies.
Bottom Line
Any business that owns at least one vehicle needs commercial auto insurance. This protects your business and other third parties in the event of an accident by handling first-party damage to your vehicle through coverage like collision and third-party damage through liability. If your business owns, rents, or borrows a vehicle for business use, make sure to review coverages with an insurance provider to find the right policy for your situation.
If your business owns an auto, a cargo fan, a dump truck, or a fleet of semitrucks, Nationwide can help you get covered right away. With nearly 100 years of experience and availability across the country, it is the natural choice for commercial auto insurance.
