Commercial Auto Insurance: Cost, Coverage & Providers

Commercial auto insurance protects businesses against claims arising from accidents involving vehicles used by the business. Coverage includes third-party liability and physical damage. Most policies will also include first-party coverage types, such as medical payments and collision. For small business owners, the average annual cost of commercial vehicle insurance is $750 to $1,200 per vehicle.

If you’re in need of commercial auto insurance, check out Insurance321. Insurance321 will help you sort through all the agents, brokers, and carriers to find the best commercial auto insurance for your business needs. Get a free, no obligation quote in as little as four minutes.

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Commercial Auto Insurance Costs

The cost of commercial auto insurance can vary widely and depends upon the number of variables, including the amount and types of vehicles your business uses. A policy that covers just one car will cost much less than a policy with a fleet of 10 trucks. However, most small business owners can expect to pay $750 to $1,200 per car in annual premium.

Most small business owners insure one car, which is why their average annual premium is $1,200 or less. However, there are many factors that can influence the cost. For example, semi truck insurance for a leased owner may be $2,000 per year. But owner operators working under their own authority may pay up to $12,000.

Factors That Determine Cost of Commercial Vehicle Insurance

There are many different types of small businesses that use vehicles as part of their profession. And since there are several different factors affecting the cost of commercial vehicle insurance, it’s wise for business owners to understand which factors relate to their business and how those factors may affect their bottom line.

Here are the primary factors that determine the cost of commercial auto insurance:

• Type of Vehicle: Generally, larger, heavier vehicles will need more coverage.
• Value of Vehicles: The premium for physical damage coverage is often a percentage of the vehicle’s value. Therefore, a higher value will translate to higher premiums.
• Number of Vehicles/Employees Driving: More vehicles and employees driving will mean higher risk exposure, more coverage needs and higher premiums.
• Distance/Radius of Travel: Long distance, especially when crossing state lines, will add to the cost.
• Coverage Types: You may need to add endorsements to the policy that apply to your business.
• Coverage Limits: Higher limits on coverage will translate into higher premiums.
• Deductibles: If you can afford the risk, raise your deductible. Higher deductibles will mean lower premiums.
• Cargo Type: If you’re hauling cargo, risk and premiums will be much lower if you’re hauling hay compared to hauling a hazardous material like fuel.
• Credit History: Insurance companies are increasingly checking credit scores and history to help determine their risk and adjust premiums accordingly. A poor credit report can increase your premiums.
• Loss History: Insurance companies will often decrease premiums with a history of zero claims.

Commercial Auto Insurance Providers

There are two primary sources of obtaining a commercial vehicle insurance: insurance agents and brokers. Some industries also have trade organizations that offer information and discounts to members. You’ll need to get multiple quotes to insure you’re knowledgeable on the best coverage, limits and pricing that fits the needs of your business.

Here are five commercial auto insurance providers we’ve researched that work with small business owners:

1. Insurance321

Insurance321 is an online insurance marketplace that helps small business find commercial auto insurance and more. Insurance321 is a good match for small business owners who want simple, yet complete coverage for their commercial vehicles. Receive multiple insurance quotes in as little as four minutes, and get affordable coverage to protect your business.

2. State Farm

Large insurance carriers like State Farm can offer bundled pricing and quality customer service that small business owners need. State Farm can also customize an insurance package to fit the unique needs of your business or industry. If you have other small business insurance needs, such as general liability, workers’ compensation, and commercial umbrella insurance, State Farm can cover that as well.

3. Nationwide

Another large insurance provider on our list, Nationwide can be a good fit for small business owners because they can offer small business owners a wide variety of products at competitive pricing. Nationwide’s commercial vehicle insurance can cover a range of risk exposures, including third-party liability, medical costs, collision, comprehensive coverage, uninsured/underinsured motorist, and more.

4. AP Intego

AP Intego offers you the ability to work with licensed agents to shop and compare multiple commercial auto insurance quotes from industry leading companies, such as Travelers. AP Intego offers small businesses an outlet to get matched with the right insurance policy for the best price.

5. Geico

Geico is known for insuring vehicles at competitive pricing, and their commercial vehicle insurance for small business owners is no exception to this track record. They also focus on fast, 24/7 claims service, which can be an advantage for small business owners. Geico can cover a commercial auto for a sole proprietor or cover an entire fleet of vehicles for a business that is growing fast.

What Commercial Auto Insurance Covers

Commercial auto insurance is a package policy that offers multiple coverage types on a first-party and a third-party basis. The first party is the insured—in this case you, the business owner. The second party is the insurance company. You purchase liability insurance to protect against claims from another—the third party.

Common Things Covered by Commercial Auto Insurance

Standard commercial vehicle insurance includes the primary third-party liability coverages, which are bodily injury liability and property damage liability. However, businesses need coverage for their own injuries and property damage with first-party coverage types like medical payments, uninsured/underinsured motorist, and collision. Add-on coverage types, called endorsements, may also be necessary.

Bodily Injury Liability

One of the primary commercial vehicle insurance coverages, bodily injury liability covers your business if an insured driver is involved in an accident and your insured driver is at fault. The coverage pays for third-party medical expenses, lost wages, funeral expenses, and legal costs from claims of a third party when your business is liable.

Property Damage Liability

Property legal damage is a primary coverage type included with most commercial vehicle insurance policies. It covers repair or replacement costs for vehicles or other property when an insured driver is found at fault in an accident. It’s important to remember that being at fault in an accident can include multiple vehicles, which would call for high coverage limits.

Medical Payments

Medical payments coverage pays medical expenses for your insured driver and passengers in the event of an auto accident. This is considered first-party coverage because it’s for you and your insured drivers, as opposed to liability coverage types, which are for third-party claims. Medical payments are covered no matter who is at fault.

Uninsured/Underinsured Motorist Coverage

Uninsured/Underinsured Motorist (UM) coverage pays if you or your insured driver is injured by another motorist who is either uninsured or is not sufficiently insured to cover the medical expenses of the injured driver. Some UM policies will also cover property damage and pain and suffering caused by an uninsured or underinsured driver.

Collision Insurance

Collision insurance coverage will help pay for repairs or replacement for your business’ insured vehicle in the event of an accident. Collisions can involve another vehicle or an object like a tree or a building. Since property damage liability is third-party coverage, you’ll need collision insurance to cover you and your employees who operate vehicles.

Comprehensive Coverage

Comprehensive coverage pays for repair or replacement of an insured vehicle if it is damaged by events other than a collision, such as vandalism, fire, damage from theft and natural disasters, flying or falling objects, and windshield damage. Comprehensive coverage may also pay to replace your vehicle if it is stolen and not recovered.

Roadside Assistance

Roadside assistance coverage will reimburse your business for expenses when your insured vehicle requires assistance such as towing, breakdown, fuel, lockout, or other assistance needed to get your insured vehicle back in service. Roadside assistance is usually available 24 hours per day and seven days per week, including holidays.

Depending on the insurance company and the policy, there may be additional coverages available that can be added to your commercial auto insurance policy. These additions, called endorsements, allow for specific coverage you may need, such as hired and non-owned liability coverage and hired auto physical damage coverage.

Hired and Non-owned Liability

Hired and non-owned liability provides coverage for third-party injury or property damage when using vehicles that are not owned by the business. For example, vehicles rented by the business and the employees’ personal vehicles that they use to perform work for the business would have liability coverage under this endorsement.

Hired Auto Physical Damage

Hired auto physical damage covers damage to a vehicle the business uses but does not own. This is different than hired and non-owned liability because it does not cover medical expenses to a third party or physical damage to a third party. It only covers property damage to the vehicle being rented by the insured.

What Commercial Auto Insurance Does Not Cover

Like other insurance types, commercial auto insurance is subject to exclusions, which are coverage types not covered in the standard policy. The primary coverage types of commercial vehicle insurance are third-party liability and property damage, as well as first-party coverage, such as medical payments and collision. But there are some things commercial auto insurance does not cover.

Here are the key items that commercial insurance does not cover:

• Workers’ Compensation: Commercial vehicle insurance will not cover claims that your workers’ compensation insurance is obligated to pay. For example, workers’ compensation covers lost wages due to an injury or illness while on the job, including operation of a vehicle; therefore, your commercial policy will not cover this.
• Care, Custody and Control: This is a common exclusion that denies coverage for property that is in your care, custody and control. For example, if you take possession of someone else’s vehicle, and it’s damaged while in your possession, your insurance could deny coverage because the vehicle was under your care, custody and control.
• Fellow Employee Injuries: Claims made against an employee who caused an injury by another employee who was injured on the job (the injured party makes a claim against both the business and the at-fault employee). The at-fault employee would not be covered by the business’s commercial auto insurance policy.

There are other exclusions that are wise to discuss with your insurance agent or broker prior to purchasing your policy. If you would like to learn more about the best coverage types for your business, you should contact the experts at Insurance321. They can help you get an easy no obligation quote within minutes.

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Tips on Applying for Commercial Auto Insurance

Insurance coverage requirements for small businesses varies by industry, location and other factors. Although commercial vehicle insurance is a relatively standard insurance product, each policy will be unique to the needs of the small business policy holder. Therefore, it’s important to know how to shop for the right policy and to know what information to have ready.

Here are the primary items you’ll need to gather before shopping for insurance:

• Business legal name, contact information, and tax I.D.
• Revenue estimates for the year
• Number of employees
• Miles you travel per year for business
• Number, type and estimated value of vehicles used for the business
• Value of equipment attached to vehicle
• Details about the nature and risk exposures of your work (to what extent you work with the public, hazardous materials, etc.)
• Claims history (at least the past three years)
• Insurance requirements (license requirements)

Here are the most important things to remember when buying commercial auto insurance:

1. Know Your Risk Exposures

Commercial vehicle insurance always includes liability and property damage coverage. However, these are third-party coverages and you’ll need to cover your own (first-party) risks with other coverage types, such as medical payments, uninsured/underinsured motorist, collision, comprehensive, and more. A good insurance agent or broker can help cover your greatest risk exposures.

2. Look for Value but Never Underinsure

You don’t want to be underinsured, nor do you want to buy unnecessary coverage. If the standard commercial vehicle insurance policy is not sufficient to cover your risk exposures, don’t hesitate to add endorsements or standalone policies, where necessary. Also, higher deductibles and lower limits may reduce premiums but could be costly when there is a claim.

According to Jared Staver, Managing Partner, Staver Law Group:

“Small businesses can fall short on commercial vehicle insurance in a number of ways, which is why the highest option of insurance is almost always the best option when dealing with commercial vehicles.”

According to Jared, these are some of the most common mistakes small businesses make when getting commercial auto insurance:

• Not fully insuring rental vehicles
• Not purchasing an auto liability policy
• Not buying enough insurance
• Not opting into uninsured/underinsured motorist coverage
• Not electing to purchase comprehensive coverage
• Not disclosing annual mileage to an insurer
• Failing to get hazardous cargo coverage

3. Use an Agent or Broker Who Knows Your Business

Commercial auto insurance is not industry-specific coverage. Therefore, each policy will not look the same. When shopping for insurance of any kind, be sure to seek an agent or broker who understands the specific needs of your business. They can also help you buy the right coverage types with the ideal limits for your particular risk exposure.

4. Complete the Application: Include All Pertinent Information

It sounds obvious, but complete the application and include all information that can tell the insurance agent, broker or underwriter how to best protect your business against risk exposures. Providing accurate and honest information will not only help protect your business, but may also prevent you from being denied coverage for a false statement on the application.

Who Needs Commercial Auto Insurance

In general, business owners who should have a commercial vehicle insurance policy are those that use a vehicle for business purposes other than for commuting to and from work. It’s also important to note that business-related accidents are typically excluded from a personal auto insurance policy. This makes commercial coverage necessary for many business owners.

Here are some examples of when you may need commercial auto insurance:

• Your vehicle is being used to pick up or deliver goods, transport people, or meet with clients.
• You have employees who use your vehicle to complete tasks for your business.
• You rent or lease a vehicle you own to others.
• Your vehicle has equipment, such as toolboxes and ladders, permanently installed on it for your business.
• There is a legal requirement to have commercial vehicle insurance for your business.

According to Tom Santamorena, Abe Insurance:

“There are many situations where you may be held liable for the actions of your employees while they are driving their own vehicles. You should be aware of what these situations may mean to your business financially. If an employee has an accident under any of these possible situations, then your business could be held accountable and you could be sued for damages.”

According to Tom, you may need commercial vehicle insurance if you answer yes to any of these questions:

• Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
• Do you occasionally send an employee to pick up a visiting client at the airport?
• Have you sent employees to pick up lunch, drop off mail, or pick up office supplies?
• Have you ever rented a vehicle while on a business trip?
• Do you have a sales force to which you provide a car allowance for business use of their personal vehicles?

Bottom Line

Commercial auto insurance is a must for any business owner who uses a vehicle for work, other than for commuting. Every small business, whether it’s a sole proprietorship or a small business with employees, will need at least the two most common coverage types for commercial vehicles, which are bodily injury liability and property damage liability.

Like your business, your insurance needs are unique, so it’s important to look at multiple insurance quotes before deciding on the right one. The experts at Insurance321 can help you with quick, no-obligation quotes for commercial auto insurance and many other popular types of coverage that your small business might need.

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