Commercial auto insurance pays for claims arising from accidents involving vehicles used by your business. Coverage includes third-party liability for property damage and bodily injury, but policies can also include first-party coverage such as medical payments and collision. For small business owners, annual commercial vehicle insurance costs $750 – $1,200 per vehicle.
If you’re in need of commercial auto insurance, check out Insurance321. Insurance321 can 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.
Commercial Auto Insurance Providers
| Provider | Best For |
|---|---|
| Progressive Commercial | Business owners looking for discounts on their commercial vehicle insurance |
| Insurance321 | Business owners who don’t have time to research commercial auto providers |
| Hiscox | Business owners who use non-business owned vehicles and want hired auto coverage in BOPs |
| AP Intego | Business owners who want to compare quotes from multiple carriers |
| GEICO | Rideshare drivers who want auto insurance that covers both personal and business use |
Progressive Commercial
Progressive Commercial is a large insurance carrier that specializes in commercial auto insurance for most motor vehicles including cars, trucks, and buses. They offer small business owners fast online quotes for customizable insurance and 24/7 customer service.
Business owners who want to save money on their commercial auto coverage should get quotes from Progressive Commercial. The company lists eight potential discounts for policyholders, including some for business experience, buying a personal auto policy, and signing up for electronic payments.
Insurance321
Insurance321 is an online insurance company known for helping small business owners find the best insurance provider for their specific operations. Business owners submit basic information about their company and Insurance321’s technology identifies the carrier that can get them the coverage they need.
Time-strapped business owners should consider working with Insurance321 to simplify the insurance process. Instead of researching companies and filling out multiple applications, business owners can use Insurance321 to get matched with a provider in just four minutes.
Hiscox
Hiscox has been writing commercial policies to cover small business owners for over 100 years. The company is known for developing deep expertise that helps them create quality products to match the unique risks in specific industries.
Hiscox offers a hired and non-owned auto liability endorsement business owners can add on to the general liability portion of their business owner’s policy. This makes Hiscox ideal for business owners who don’t have company-owned cars but regularly rent, hire, or borrow vehicles for work.
AP Intego
AP Intego is a highly rated business insurance broker that uses a digital platform to simplify the insurance application process. Business owners can complete the application in just five minutes to get instant quotes for most coverage, and then bind policies online.
As a broker, AP Intego partners with multiple top-rated insurance carriers to bring coverage to small business owners. This makes them the ideal choice for business owners who want to compare insurance policies before they buy.
GEICO
GEICO is a national carrier known mainly for competitively priced auto insurance, covering 27 million vehicles across the U.S. They can write commercial auto insurance for a sole proprietor with a single company car or a fast-growing business with an entire fleet of vehicles and offer fast, 24/7 claims service.
GEICO may be the best insurer for rideshare drivers and on-demand delivery drivers who want one auto insurance policy. The company has developed rideshare insurance that’s a hybrid of personal and commercial auto and provides coverage through all phases of a rideshare, including when the driver is driving to pick up or waiting for a passenger.
Commercial Auto Insurance Costs
Commercial auto insurance cost varies widely depending on a number of factors, including the number and types of vehicles your business uses. Policies for one car typically cost less than policies for a fleet of trucks. However, most small business owners can expect to pay $750 to $1,200 per car in annual premium.
Commercial Vehicle Insurance Costs by Vehicle Type
| Vehicle Type | Typical Premium Range |
|---|---|
| Commercial Car | $750 - $1,200 |
| Semitruck (owner/operator) | $8,000 - $12,500 |
| Limousine | $4,000 - $6,000 |
| Taxi Cab | $5,000 - $10,000 |
Most small business owners insure one car, which is why their typical annual premium is $1,200 or less. However, other factors can influence the cost. For example, truck drivers face greater risk because they drive more and have more costly accidents, so owner-operators working under their own authority may pay up to $12,500 per year.
The primary factors that determine commercial vehicle insurance costs include:
- Vehicle type: Generally larger, heavier vehicles need more coverage.
- 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: More vehicles and employees driving means higher risk exposure, which usually requires more coverage and leads to higher premiums.
- Distance traveled: Long trips, especially those that cross state lines, add to commercial auto insurance costs.
- Coverage types: Business owners typically choose from a list of commercial auto coverages and endorsements, and each one adds to the overall cost.
- Coverage limits: Higher limits on coverage translate into higher premiums, but they also mean less costs to business owners if they experience a claim.
- Deductibles: Higher deductibles mean lower premiums, so many agents recommend selecting the highest deductible you can afford.
- Cargo type: If you’re hauling cargo, risk and premiums are usually much lower if you’re hauling hay compared to hauling hazardous materials.
- Credit history: Insurance companies check credit scores to help determine commercial auto insurance costs, so a poor credit report can increase your premiums.
- Loss history: Insurance companies often decrease premiums with a history of zero claims.
Because of the number of factors impacting commercial auto insurance costs, business owners should try to understand which factors relate to their situations and how those factors may affect their bottom line.
What Commercial Auto Insurance Is
Commercial auto insurance is a policy that offers multiple coverages for both first-party and third-party damages. First-party coverage pays for the insured’s medical bills and vehicle damage, while third-party coverage pays for injuries and property damage the insured causes another person. Limits on commercial vehicle insurance policies are usually higher than personal auto insurance policies.
Most states require business owners who use vehicles have at least liability coverage. However, businesses can add coverage for their own injuries and property damage with first-party coverages to protect against expenses, such as medical payments, uninsured and underinsured motorist, and collision.
Common Coverages in Commercial Auto Insurance
| Coverage | ||
|---|---|---|
| Liability | ||
| Hired/Non-owned Auto Liability | ||
| Hired Auto Physical Damage | ||
| Medical Payments | ||
| Uninsured/Underinsured Motorist | ||
| Collision | ||
| Comprehensive | ||
| Roadside Assistance |
What Commercial Auto Insurance Covers
Commercial vehicle insurance includes liability coverage for other people’s bodily injury and property damage when you or your insured driver is at fault in an auto accident, but business owners can also cover their own damages by adding first-party coverages, including medical payments and collision. Truckers typically need these and other industry-specific coverages.
Commercial auto coverages include:
Liability
Liability covers your business if you or your insured driver is at fault in a collision. If your business is found liable for a car accident, liability coverage pays the injured party’s medical and repair bills, lost wages, funeral expenses, or your legal fees.
Medical Payments
Medical payments cover medical expenses for you, your insured driver, and your passengers after an auto accident. This is a no-fault coverage, so your insurer pays medical bills up to the insured amount no matter who is liable for the accident. Some states require business owners to carry medical payments coverage.
Uninsured & Underinsured Motorist
Uninsured and underinsured motorist (UM) coverage pays if you or your insured driver is injured by another motorist who is either uninsured or whose insurance cannot cover the medical expenses of the injured driver. Some UM policies also cover property damage as well as pain and suffering caused by an uninsured or underinsured driver.
Collision
Collision insurance is a first-party coverage that helps pay repair bills or the cost of a replacement vehicle if your business vehicle is damaged in an accident. Covered events can include collisions with another vehicle or an object like a tree or a building.
Comprehensive
Comprehensive coverage helps pay for repairs or the replacement of an insured vehicle if it is damaged by events other than a collision. Covered events can include 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.
Hired & Non-owned Auto Liability
Hired and non-owned liability provides coverage for third-party injury and property damage when you or your employees use vehicles that are not owned by the business. For example, if an employee causes an accident in their personal auto while running business errands, hired and non-owned auto liability typically covers damage to the other vehicle. Hired and non-owned auto liability can cover these costs for vehicles your business rents.
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 or physical damage to a third party. It only covers property damage to the vehicle being rented by the insured.
Roadside Assistance
This coverage reimburses your business for expenses when your insured vehicle requires roadside assistance, such as towing, 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.
What Commercial Auto Insurance Doesn’t Cover
Like most insurance policies, commercial auto insurance typically has several exclusions, which are incidents not covered in a standard policy. These exclusions are usually listed in the policy and should be reviewed before buying coverage.
Common commercial auto exclusions include:
- Expected or intentional acts: Most commercial auto insurance does not pay when injuries are caused by intentional acts. For example, injuries sustained in a road rage incident usually aren’t covered.
- Workers’ compensation coverage: Commercial vehicle insurance doesn’t pay claims covered by workers’ compensation insurance. If workers’ comp covers an employee’s medical bills after a work-related car crash, commercial auto doesn’t.
- Care, custody, and control: This common exclusion denies coverage for property in your care, custody, and control. For example, if you damage another person’s vehicle while it’s in your possession, your insurer could deny coverage because the vehicle was under your care, custody, and control.
- Fellow employee: Commercial auto insurers typically deny claims made by one employee that a fellow employee caused an injury while both were working. The at-fault employee may not be covered by the business’ commercial auto insurance policy.
There are other exclusions, so you may want to discuss what’s covered in your policy with your insurance agent or broker. Also, check out our article on the Best Workers’ Compensation Insurance Companies to learn more about workers’ comp providers.
Who Needs Commercial Auto Insurance
Any business owner who uses vehicles for work should have commercial auto insurance coverage. This includes those who have business-owned vehicles and those who rent, hire, or borrow vehicles for work. It can even include business owners who use their personal vehicles for business purposes because those activities are typically excluded from personal auto insurance.
Some other examples of when businesses need commercial vehicle insurance include:
- 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 insurance broker Tom Santamorena of 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.”
Santamorena says 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?
Who Needs a Commercial Auto Insurance Alternative
Some business owners may think commercial auto insurance covers all of their operations when they actually need additional policies to be fully protected. For example, an auto repair shop may need commercial auto coverage plus specific add-ons for their towing service, such as liability coverage for customers’ cars when they are being towed or stored at the garage.
You may need additional or alternative coverages if you’re in certain industries, including:
- Rideshare: Rideshare companies offer drivers commercial insurance, but it can be insufficient for some circumstances.
- Construction: Mobile equipment, such as bulldozers and cranes, are not covered by commercial auto. Additionally, smaller tools and equipment aren’t covered by property insurance when they’re in transit.
- Agriculture: Much like construction businesses, farmers and other agriculturalists need separate coverage for their large, mobile equipment.
- Shipping: In addition to insuring their means of transport, shippers need cargo liability insurance and other coverages.
- Car hauling: The extra liability that comes with hauling cars usually means traditional commercial vehicle is insufficient for your business.
- Auto repair: You may need coverage for towing cars and storing them on your property.
Additional Business Insurance for Vehicles
Business owners may purchase commercial auto insurance and assume it covers all of their auto-related risks. Unfortunately, certain operations, often based on industries, require additional coverages.
Other policies business owners may need for their auto-related risks include:
Rideshare Insurance
Personal auto insurance does not cover accidents that occur when driving for rideshare companies, like Uber and Lyft. While most platforms offer commercial auto to their drivers, the coverage is somewhat limited, especially when drivers are waiting for passengers.
In response to this coverage gap, some auto insurance providers now offer rideshare auto insurance and endorsements to help drivers maintain coverage as long as their app is on.
Inland Marine
Business owners who transport equipment to various locations need inland marine insurance. In cases of theft, commercial auto insurance typically only covers damage to the vehicle, and not the theft of any property inside it.
Business owners who may need inland marine insurance include:
- Contractors
- DJs
- Photographers and videographers
- Food truck operators
- Jewelers
Contractor’s Equipment Coverage
Commercial auto insurance does not cover mobile equipment such as tractors, backhoes, or forklifts. Third-party claims of bodily injury and property damage arising from the operation of mobile equipment are typically covered by general liability insurance. Damage to the equipment itself requires contractor’s equipment coverage, which can be written as a standalone policy or as an add-on to commercial property insurance.
Garagekeeper’s Liability Insurance
Business owners who store customers’ vehicles on their property may need garagekeeper’s liability insurance in case those vehicles are damaged by theft, vandalism, fire, or extreme weather. Policies do not cover faulty workmanship, and most require an endorsement if you want to cover customers’ personal property inside the vehicle.
Types of businesses that may need garagekeeper’s liability insurance include:
- Auto repair shops
- Tow truck operators
- Auto glass installers
- Sound installation shops
- Detailing operations
- Auto restoration
Garagekeeper’s liability insurance is sometimes called storage location insurance, but it should not be confused with garage liability insurance. While both may be found in a garage policy, garagekeeper’s coverage pays for damage to customers’ vehicles when left in your care, a risk that is often excluded in general liability. Garage liability insurance covers third-party claims arising out of other business operations.
On-hook Towing Insurance
On-hook towing insurance pays to repair or replace other people’s vehicles when they are damaged during a tow. This policy is valuable for tow truck operators, but car haulers and other truckers may need it too.
Tips on Getting Commercial Auto Insurance
Commercial auto insurance requirements for small businesses vary by industry, location, and other factors. Although commercial auto is a relatively standard product, each policy needs to be tailored to the business owner’s unique situation. This makes it important to shop around for a policy that fits your business and your budget.
Some tips to remember when buying commercial auto insurance include:
1. Know Your Risk Exposures
Commercial vehicle insurance always includes liability coverage for harm you cause others. However, only getting these third-party coverages may mean damage to your car or injuries to you and your passengers aren’t covered, so you may want to add coverage for your first-party risks. A good insurance agent can help identify your greatest risk exposures.
2. Look for Value but Never Underinsure
You don’t want to be underinsured, but you also want to avoid buying unnecessary coverage. If a basic commercial vehicle policy is not sufficient to cover your risks, don’t hesitate to add endorsements or look for broader coverage.
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.”
“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.”Staver says some of the most common mistakes business owners make when getting commercial auto insurance include:
- Not fully insuring rental vehicles
- Not purchasing an auto liability policy
- Not buying enough insurance
- Not opting into uninsured and 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 Who Knows Your Industry
Commercial auto insurance is not industry-specific, but business owners still need to consider their industries when shopping for coverage. An agent who has experience in your industry can anticipate risks and their impacts. That way, they can help you buy the right coverage types with the appropriate limits for your particular exposures.
4. Include All Pertinent Information on the Application
The information provided on a car insurance application tells your agent, broker, or underwriter how to best cover your specific risks, so you want to be as accurate and honest as possible. That not only helps protect your business, but it may also prevent you from being denied coverage if you file a claim.
Commercial Auto Insurance Frequently Asked Questions (FAQs)
Many of the questions people ask about commercial auto insurance have to do with the overlap between driving for personal use and driving for business. Small business owners sometimes blur the line between the two, and that may leave them exposed. We’ve answered some of the most frequently asked questions below. If yours isn’t here, please ask it in the comment section or post it to our forum.
Do I need commercial auto insurance if I drive my personal car for business?
Personal auto insurance typically excludes business-related driving, so business owners most likely need commercial auto insurance. This is especially true if they drive their personal vehicle for business-related trips on a regular basis. Business owners who only occasionally drive their personal car for work may have sufficient liability coverage with the personal auto insurance.
Does commercial auto cover personal use?
Business owners who periodically use their business-owned vehicles for personal driving may be covered by their commercial auto insurance. This usually depends on the specifics of your policy, so you should review your coverage with an agent to make sure.
Is commercial auto insurance expensive?
Compared to personal auto insurance, commercial auto insurance usually costs more because insurers consider business driving to be riskier than personal driving. There are a number of reasons for this, but the two main ones are the amount of time on the road and the likelihood of a lawsuit after an accident.
Bottom Line
Commercial auto insurance is a must for any small business owner who uses a vehicle in their business. Every business that owns, rents, or borrows cars, whether it’s a sole proprietorship or a business with employees, needs at least liability coverage. However, some business operations may require more coverage, so it’s important to work with an expert who can find a policy that fits your situation.
The experts at Insurance321 can help you find the right commercial auto insurance provider for your operations. Their representatives evaluate your risks, so you can get quotes in as little as four minutes.
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