Commercial Auto Insurance: Cost & Coverage in 2023
Nathan Weller is an Insurance Expert focusing on insurance for small business. He has 15 years experience in insurance operations, FNOL, and claims handling.
Commercial auto insurance covers accidents involving vehicles used or owned by your business. Third-party liability coverage for injuries and property damage is required in most states. Providers also offer first-party coverage for your vehicle like collision or comprehensive. Commercial auto insurance costs can range anywhere from $700 to $2,700 per car annually.
Regardless of the type of vehicle or amount of vehicles your business owns, Tivly can help you find the coverage you need. After filling out a short form, a representative will call you to discuss your business. It works with more than 200 providers to help find the right commercial auto insurance for your business.
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.
Some examples of when businesses need commercial vehicle insurance:
- Delivery drivers
- Ride-share drivers
- General contractors
- Tradespeople
- Caterers
- Food trucks
States regulate how personal and business use is interpreted in the policy so, in some states, using your personal vehicle to visit clients regularly is considered coverable with personal auto and in other venues, it will be an exclusion. It’s 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.
How Much Does Commercial Auto Insurance Cost
Costs for commercial auto insurance varies depending on several factors. Policies for one car, which is what the following quotes are for, are less than policies for multiple vehicles or a fleet.
Vehicle Type | Average Annual Premium |
|---|---|
Commercial Vehicle | $700 to $2,700 |
Delivery or Cargo Van | $3790 to $6,900 |
Limousine | $4,600 to $11,500 |
Taxi | $5,750 to $11,500 |
Semi-Truck (Owner-Operator) | $9,200 to $14,400 |
Providers consider many factors when calculating a premium. Some of the primary factors that determine commercial vehicle insurance cost include:
- 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 means the greater risk for an accident and thus, usually more coverage and a higher premium.
- Coverage: The types of coverage, 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.
What Is Commercial Auto Insurance?
Commercial auto insurance is a policy that can come with multiple coverages for both first and third-party damages and injuries. First-party refers to your vehicle’s damages, downtime (rental), and any injuries in your vehicle with medical payments. Third-party refers to other vehicle or structure damage, and injuries in another vehicle or your passengers when the driver of your vehicle is at fault.
Some providers will offer a form of business interruption for your business if you’re losing income while the car is in the shop from an accident.
Commercial Auto Insurance Coverages
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 party |
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 party |
Medical Payments | Medical expenses for anyone in your vehicle who is injured, regardless of fault | First party |
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 party |
Collision | Repair cost or replacement for your vehicle if it is damaged in a collision | First party |
Comprehensive | Repair cost or replacement for your vehicle if damaged by events other than a collision, including hitting an animal | First party |
Roadside Assistance | Expenses for roadside assistance required by your vehicle | First party |
Rental or Loss of Use | Provides for rental cars when your vehicle is nondrivable from an accident. Typically has a daily and maximum limit | First party |
These are the most common coverages for commercial auto. Please note: some providers offer a single coverage for liability with a combined single limit for both bodily injury and property damage.
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, between 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’s 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’s done regularly, or you have dedicated vehicles for work, you need a commercial auto policy.
Bottom Line
Any business that owns at least one vehicle needs commercial auto insurance. This insurance 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 a provider to find the right policy for your situation.
If your business owns an auto, cargo fan, dump truck, or fleet of semi-trucks, Tivly can help you get covered right away. Working with over 200 providers, Tivly will help match you to the provider that fits your needs.
