Commercial Auto Insurance: Cost, Coverage & Providers

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, but policies also can include first-party coverage such as medical payments and collision. For small business owners, annual commercial vehicle insurance costs $600 to $2,400 per vehicle.

If you’re in need of commercial auto insurance, check out Progressive Commercial. It’s a reputable provider with experienced representatives available to help you save on coverage through multiple discounts. Easily get a free quote online in minutes.

Visit Progressive Commercial

Top Commercial Auto Insurance Companies

The best commercial auto companies boast strong financial stability as well as excellent online features, competitive costs, and simple claims service. Other considerations include additional services and policies available to small business owners, as well as customer feedback.

Progressive Commercial

Small business owners seeking ways to save money on their business car insurance may benefit from getting quotes with Progressive Commercial. The insurer boasts eight discounts for qualifying policyholders, including some for bundling policies, paying premiums in full, and signing up for electronic payments.

Progressive Commercial is a large insurance carrier that specializes in commercial auto insurance for most motor vehicles, including cars, trucks, and buses. It offers small business owners fast online quotes for customizable insurance and 24/7 customer service.

The Hartford

The Hartford features additional savings for fleet owners looking for commercial auto insurance with its FleetAhead program, which uses telematics and real-time data to help improve safety. The Hartford offers excellent customer service as well as professional claims support.

The Hartford has been helping small businesses with their insurance needs for more than 30 years. Business owners can get a free quote online or call to work with a representative for obtaining information on business car insurance.

Hiscox

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.

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 it create quality products to match the unique risks in specific industries.

AP Intego

As a broker, AP Intego partners with multiple top-rated insurance carriers to bring coverage to small business owners. This makes it the ideal choice for business owners who want to compare insurance policies before they buy.

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 complete the purchase online.

GEICO

GEICO is a great commercial auto company for ride-share and on-demand delivery drivers who want one auto insurance policy. The company has developed ride-share insurance that’s a hybrid of personal and commercial auto and provides coverage through all phases of a ride-share, including when the driver is driving to pick up or waiting for a passenger.

GEICO is a national carrier known mainly for competitively priced auto insurance, covering 28 million vehicles across the U.S. The provider 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 offers fast, 24/7 claims service.

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 policyholder’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 because businesses tend to face more claims.

Most states require that business owners who use vehicles have at least liability coverage. However, businesses can add first-party coverage to protect against expenses from their own injuries and property damage, such as medical payments, an accident involving an uninsured or underinsured motorist, and collision. While both personal and commercial auto insurance pay for medical bills and vehicle damages after an accident, commercial auto insurance typically covers different types of vehicles and heftier claims.

Commercial Auto Insurance Costs

Commercial auto insurance costs vary 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 $600 to $2,400 per car in annual premium. Cost and limits are influenced by vehicle type, reason for driving, cargo, and distance traveled.

Commercial Vehicle Insurance Costs by Vehicle Type

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. Certain types of trucks may require commercial truck insurance.

The primary factors that determine commercial vehicle insurance costs include:

• Vehicle type: Generally larger, heavier vehicles need higher limits because they can cause more damage 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: 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 lower 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 reduce premiums for businesses with few or no 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 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 also can cover their own damages by adding first-party coverages, including medical payments and collision. Coverage only applies to items attached to the vehicle, like a tool box attached to a pickup truck.

Semitruck insurance typically includes these and other industry-specific coverages.

Common Coverages in Commercial Auto Insurance

Liability

Liability covers your business if you or your insured driver causes 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, and your legal fees if the party sues.

Hired & Non-owned Auto Liability

Hired and non-owned liability pays 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 his 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 also cover these costs for vehicles your business rents.

Hired Auto Physical Damage

Hired auto physical damage pays to repair or replace a vehicle the business damages 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 or borrowed by the insured.

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 (UM) and underinsured motorist (UIM) coverage pays if you or your insured driver is injured by another motorist who is either uninsured or whose insurance cannot cover your medical expenses. Some UIM 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, theft, 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

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.
• Handling of property: This exclusion denies coverage for property that resides in or is transported by your vehicle, such as items you may be delivering to a client.
• Racing: Any form of racing, demolition, or stunt activity will not be covered by commercial auto insurance.
• Movement of property by mechanical device: Damage is not covered by items that are not attached to your vehicle (e.g., you have equipment unsecured in the flatbed of your truck and it goes flying into another vehicle on the road, causing damage).

There are other exclusions, so you may want to discuss what’s covered in your policy with your insurance agent or broker.

Who Needs Commercial Auto Insurance?

Any business owner who uses vehicles for work should have business car 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:

• Delivery drivers
• Ride-share drivers
• General contractors
• Tradespeople
• Caterers
• Food trucks

Is Commercial Auto Insurance Required by Law?

There is a legal requirement to have commercial vehicle insurance for your business. Most states require liability coverage, and some states also require personal injury protection and uninsured/underinsured motorist coverage. Virginia and New Hampshire don’t require commercial auto insurance, but they do both have additional requirements for covering liability.

However, it’s important to have adequate commercial auto coverage—even when it isn’t required. 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?

Commercial Auto Insurance vs Personal Auto Insurance

Many business owners don’t realize it, but personal and commercial auto are different. Personal auto policies typically exclude business-related driving, especially if done on a regular basis. For example, a consultant who routinely drives to a client’s office most likely needs a commercial auto policy even if their car isn’t registered in their business’ name and they already have personal car insurance.

However, business owners who only occasionally drive their personal car for work may have sufficient liability coverage with their personal auto insurance. Moreover, business owners who periodically use their business-owned vehicles for personal errands may be covered by their commercial auto insurance. What’s covered depends on the specifics of your policy, so you should review your coverage with an agent to make sure.

Additional Business Insurance for Vehicles

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.

Ride-share Insurance

Personal auto insurance does not cover accidents that occur when driving for ride-share 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 ride-share 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
• Farmers and ranchers

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 Coverage

Business owners who store customers’ vehicles on their property may need garagekeeper’s coverage in case those vehicles are damaged by theft, vandalism, fire, or extreme weather. This is an optional coverage typically found in garage liability insurance.

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

Garage liability insurance covers third-party injury and property damage claims when they are caused by garage operations. However, the policy excludes damage to customers’ vehicles when they are in your care, making it important to get a garage insurance that includes garagekeeper’s liability coverage.

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.

Cargo Liability Insurance

Cargo insurance is a type of property coverage with two main types of policies: ocean marine, for shipments by sea, and inland marine insurance, for shipments by land. Some cargo liability insurance coverage includes all modes of transportation. Import/export companies, wholesalers, distributors, and manufacturers most likely need cargo insurance.

Commercial Fleet Insurance

If your business owns more than one vehicle, you may need commercial fleet insurance, which covers all the vehicles your business owns under one policy. The more vehicles and drivers your business has, the more risk you have, so a larger fleet requires additional coverage than a single vehicle.

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 Risks

Commercial vehicle insurance always includes liability coverage for harm you cause others. However, only getting these third-party coverages means damage to your car or injuries to you and your passengers aren’t included, 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.”

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 your risks and their impacts. That way, they can help you buy the right coverage 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.

“It’s quite common for ride-sharing drivers to think that they can just hide their status as an Uber or Lyft driver from their auto insurance carrier. This certainly might work for a while, but should they ever find themselves filing a claim, then their insurance carrier may very well choose to dig into the situation and ultimately deny their claim or even rescind their policy because of their lack of forthrightness. The most important point for all drivers—whether ride-sharing drivers, personal or business mixed-use drivers, or other scenarios—is to be upfront with their agent and carrier about their activities so they can make sure they have proper coverage.”

— Joel Ohman, Founder, CarInsuranceComparison.com

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.

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.

How can I lower my commercial auto insurance rates?

Many insurers offer discounts on commercial auto insurance if you meet certain qualifications. Additionally, you and your employees should maintain safe driving records. Other ways to reduce the cost of your premium may include increasing your deductible and lowering your limits, paying your policy in full, and opting in for paperless billing and electronic payments.

What is considered a commercial vehicle?

Businesses generally use larger, heavier vehicles for delivery and transport, and these vehicles typically need more coverage. Heavy-duty vehicles, like a semitruck, can cause more damage if they’re in an accident. Additionally, vehicles that require a special license to own and operate can mean higher coverage costs.

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 Progressive Commercial can help you find the right commercial auto insurance policy for your operations. Work with their experienced representatives for a seamless customer experience and get a free, fast quote online.

Visit Progressive Commercial