Commercial Auto Insurance: Cost, Coverage & Providers
Virginia has extensive experience writing about insurance and finance for a number of online platforms. She brings this expertise to business insurance and life insurance content across Fit Small Business.
This article is part of a larger series on Starting a Business.
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 around $600 to $2,400 per vehicle.
Any business owner who uses vehicles for work should get coverage. If you’re looking for affordable commercial auto insurance, check out Progressive Commercial. It’s a reputable provider with experienced representatives who can help you save on coverage through multiple discounts. Get a free quote online easily in minutes.
What Is Commercial Auto Insurance?
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. Most states require liability insurance, but many business owners choose to add other coverages for greater protection.
Commercial Auto Insurance Coverages
Coverage | What It Covers | First Party or Third Party |
|---|---|---|
Liability | Third-party medical, repair costs, and your legal fees when you or your insured driver are at fault | Third party |
Hired/Nonowned Auto Liability | Third-party medical expenses and property damage when using a vehicle not owned by your business | Third party |
Hired Auto Physical Damage | Damage to vehicle used but not owned by the business | Third party |
Medical Payments | Medical expenses for you, your insured driver, and passengers, no matter who is at fault | First party |
Uninsured/Underinsured Motorist | Your medical expenses and vehicle repairs when your in a car accident with a driver who doesn’t have enough insurance | First party |
Collision | Repair costs for your vehicle if damaged in a collision | First party |
Comprehensive | Repair costs for your vehicle if damaged by events other than a collision | First party |
Roadside Assistance | Expenses for roadside assistance required by your vehicle | First party |
Businesses involved in delivery and transport generally use larger, heavier vehicles that typically need more coverage because they can cause more damage in an accident. They may also require additional policies. Semitruck insurance, for example, includes many of the coverage options on this list as well as industry-specific coverages like bobtail and motor truck cargo.
Commercial Auto Insurance vs Personal Auto Insurance
Many business owners don’t realize it, but personal and commercial auto insurance are different. Personal auto policies typically exclude business-related driving, especially if business driving occurs 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 his vehicle isn’t registered in his business’s name, and he already has 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, running personal errands in business-owned vehicles may be covered by 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.
How Much Does Commercial Auto Insurance Cost?
Commercial auto insurance costs vary widely depending on a number of factors, including the number 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 premiums. Costs are also influenced by vehicle type, drivers’ records, cargo, and distance traveled.
Commercial Vehicle Insurance Costs by Vehicle Type
Vehicle Type | Typical Premium Range |
|---|---|
Commercial Car | $600 to $2,400 |
Delivery or Cargo Van | $3,300 to $6,200 |
Limousine | $4,000 to $10,000 |
Taxi | $5,000 to $10,000 |
Semitruck (Owner-Operator) | $8,000 to $12,500 |
Most small business owners insure one car, which is why the 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 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 rather than 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.
Top Commercial Auto Insurance Companies
Provider | Best For |
|---|---|
Business owners looking for multiple discounts and customized coverage | |
Ride-share drivers who want auto insurance that covers both personal and business use | |
Business owners who want help picking the right offer for their situation | |
Professionals who want accident forgiveness | |
Small business owners who want to compare quotes from top carriers |
While financial strength is always a consideration when picking a carrier, you also want to look at the services that the top commercial auto insurance companies offer. Risk management resources and 24/7 claims processing can make your life easier. Our list includes insurers that promise excellent service with quality coverage, plus brokers that can give you access to more carriers.
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. Business owners with a fleet of vehicles can also get a 5% discount by signing up for Snapshot Proview, a plug-in device that helps Progressive Commercial offer personalized auto rates and fleet management assistance.
Geico
Geico is a great commercial auto company for ride-share and on-demand delivery drivers who want one auto insurance policy. The company 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 can also 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.
Commercialinsurance.NET
Commercialinsurance.NET is a different sort of insurance company. Rather than writing policies, this company refers small business owners to the best carriers, agencies, and brokerages for their particular insurance needs. As the business owner, you submit your information, and a representative calls to walk you through your commercial auto insurance quotes. You pick the right one for you, and the representative connects you to the individual who can write the policy. Most business owners can get insured within 30 minutes of submitting their information.
The Hartford
The Hartford is an excellent option for professionals, such as consultants, architects, and engineers who need commercial auto insurance and have excellent driving records. The company includes two programs automatically in its commercial auto premiums: accident forgiveness and fender bender forgiveness. The first keeps business owners’ auto insurance rates the same after an accident if they’ve maintained a clean driving record for three years. Fender bender forgiveness coverage protects against glass claims, towing claims, and increased premiums after accidents that cost less than $1,000.
CoverWallet
Business owners who want to comparison shop should fill out an application with CoverWallet. As an online broker, CoverWallet submits your information to all available carriers, including top companies like Chubb and Liberty Mutual, and often returns multiple quotes from a single application. If you have questions while completing your application, you can call, chat, or email an insurance advisor for assistance.
Who Needs Commercial Auto Insurance?
Any business owner who uses vehicles for work should have commercial vehicle 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 typically are 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?
Most states require business owners with vehicles to carry liability coverage, and some states also make personal injury protection and uninsured/underinsured motorist coverage compulsory. New Hampshire is the only state that doesn’t mandate commercial auto insurance, but it does require drivers to pay for damage they cause while driving. Virginia has minimum auto insurance requirements, but drivers can pay a fee to drive uninsured.
Additional Business Insurance for Vehicles
Some business owners may think commercial auto insurance covers all of their operations when they need additional policies to be fully protected. For example, an auto repair shop typically needs commercial auto coverage plus specific add-ons for their towing service like liability coverage for customers’ cars when 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 like tractors, backhoes, or forklifts. Third-party claims of bodily injury and property damage arising from the operation of mobile equipment typically are covered by general liability insurance. Damage to the equipment itself requires contractor’s equipment coverage, which can be written as a standalone policy or an add-on to commercial property insurance.
Garagekeeper’s Coverage
Business owners who store customers’ vehicles on their property may need garagekeeper’s coverage if those vehicles are damaged by theft, vandalism, fire, or extreme weather. This is an optional coverage typically found in garage liability insurance.
The 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 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.
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.
