Commercial Auto Insurance

Complete Guide to Commercial Auto Insurance

(If your business uses vehicles of any type, it probably needs commercial auto insurance)

Many businesses need a vehicle for one reason or another, whether you’re shipping goods, delivering product, transporting clients, or simply driving somewhere while you’re on the job. Commercial auto insurance gives you car insurance in the business’s name. 

However, while commercial auto insurance may look and sound a lot like personal auto insurance, the two are different in how they’re structured and used. To better understand the differences and how both you and your business can be fully covered with both types of insurance, be sure to talk with an independent insurance agent who can cover both. 


What Does Commercial Auto Insurance Cover?

Commercial auto insurance covers your vehicles and gives your business liability protection if one of your business vehicles caused an accident. The basics of what it can cover is very similar to your personal car insurance, which can include:

  • Liability: Commercial auto liability covers your business for accidents, injuries, and property damage that you’re responsible for. If one of your commercial vehicles causes the accident or is brought into the lawsuit, your business is covered. 
  • Uninsured/Underinsured: If another driver is at fault for an accident that you're involved in but either doesn’t have any insurance or doesn’t have high enough limits, then this coverage pays the rest of your injury expenses or property damage. 
  • Medical payments: This pays out a dollar amount to anybody occupying your vehicle, regardless of who was at fault for the accident or injury. 
  • Collision: Collision coverage pays for physical damage to your covered vehicles if they get damaged from hitting another car or solid object, such as a tree, telephone pole, or building. 
  • Comprehensive: This covers your vehicles for almost all other types of physical damage that’s not a collision. Some of the most common comprehensive claims include fire, theft, hail damage, broken glass, falling objects, and hitting animals on the road. 
  • Rental expenses: You can buy this coverage on specific vehicles, which will pay a certain dollar amount each day for you to rent another vehicle if yours is undrivable due to a covered loss. 

While many of the coverage options are the same as with personal car insurance, there are two key differences with commercial auto coverage. 

  • Vehicle symbols: When you first buy commercial auto insurance, the insurance company or agent will give your policy a certain auto symbol. Some symbols are extremely broad, but one symbol is extremely narrow. Symbol 7 means that only specified vehicles are covered under the commercial auto policy. While this might not sound bad, it means that you have to specifically designate any and all vehicles that need to be covered. It also means that if you forget to add a new vehicle you bought, or an employee uses a different vehicle that’s not specified, you could be without coverage.
  • Hired and non-owned: This is typically found on every commercial auto insurance policy, and for good reason. It basically extends coverage to any vehicle that’s used by you or an employee that the business doesn’t own, which could include personal vehicles. However, it’s not quite as broad and foolproof as that, because it’s designed to offer temporary coverage in situations such as when an employee borrows their neighbors car for the day and uses it for business purposes. It’s not designed to be a long-term substitute for having coverage for any type of vehicle the business doesn’t want to own or put on it’s policy. 

Does Personal Auto Insurance Cover Commercial Use?

Personal auto insurance (car insurance) could cover some types of business use situations, but it’s not necessarily automatic coverage, meaning you’ll want to adjust your personal auto insurance to reflect your business use

Also, it’s important to remember that just because your personal auto insurance might pay a claim that you caused while using your personal vehicle during work, the lawsuit would likely also sue your business. This means that your personal car insurance would cover you personally, but it wouldn’t cover your business, so your business could be left to pay a lawsuit costing in the hundreds of thousands of dollars. 

Each insurance company handles personal/business use slightly differently. It’s best to be up front and honest with your insurer so that you know whether you have coverage or not. 

Rather than be worried that your company will say you don’t have coverage, it’s better to find that out now and risk having to pay a higher premium, than to not say anything, get into an accident and then find out you or your business doesn’t have any coverage. 

There are some types of business use that are almost certainly not covered by your personal car insurance:

  • Commercial vehicles: Vehicles that are over a certain gross weight, such as 15,000 lbs. will need to be covered under a commercial policy. This typically includes large pickup trucks, semi trailers, and large vans. 
  • Public livery: Public livery is transporting people around town for a fee. This type of activity will need to be covered under a commercial policy. 
  • Pizza delivery: Most food delivery, including pizza, is not covered under a personal auto policy and will need to be covered under a commercial auto insurance policy. 

Finally, if a vehicle is titled under the business’s name, it will need to be insured under a commercial auto policy. 

How to Find the Right Commercial Auto Insurance

If you already have business or commercial insurance, you can usually add a commercial auto insurance component to your policy. Most insurance companies that offer business insurance also offer commercial auto insurance. You may even be able to receive a discount for bundling your commercial package, which includes general liability and commercial property, with your commercial auto insurance. 

However, if you’re considered a high-risk driver or your business is involved in trucking or transportation, you may need to buy a monoline commercial auto policy, which means it’s a stand-alone policy through another company. Trucking companies in particular require more specialized insurance. 

Be sure to speak with an independent insurance agent who can talk with you about the nature of your business and can help you find the proper type of commercial auto insurance. 

Types of Vehicles Covered by Commercial Auto Insurance

Commercial auto insurance can cover any type of vehicle that’s used for business purposes, which could include private passenger vehicles. An example of what’s typically covered by commercial auto insurance includes: 

The key distinction is whether a vehicle is ever used for a business. Any vehicle that’s owned and titled under a business name should be insured under a commercial auto insurance policy. Private passenger vehicles that are used for both personal and business use might still need to be insured under commercial auto insurance in order to protect the business if it’s involved in a claim. 

How to Get Commercial Auto Insurance Quotes

You can get a commercial auto insurance quote either online or through an agent, though it can be difficult to know if you’re selecting the right type of coverage if you’re shopping online. An independent insurance agent will customize your quote to best suit your business. To get a commercial auto insurance quote, you’ll need to supply the following information:

  • The name of your business
  • The nature of your business
  • Whether you’ll be carrying or transporting any equipment or goods
  • Vehicles you want to be insured, including VINs and values
  • List of drivers, including names, date of births, and drivers license numbers
  • Radius of miles that your vehicles will drive

This information will help an independent insurance agent get started on your quote, though also may need to give information about other commercial insurance you have and your personal auto insurance if there’s overlap. 

The Benefits of an Independent Insurance Agent

An independent insurance agent understands the complexities of commercial auto insurance. There’s often a fine line between what’s covered under commercial auto insurance and what’s covered somewhere else, such as personal auto insurance or commercial general liability. An independent insurance agent can thoroughly look at your business and provide valuable advice and options to ensure that your business doesn’t have any gaps in coverage. 

An independent insurance agent can also give you insurance quotes from multiple insurance companies, which can help give you the broadest coverage for the lowest price. 

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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