Commercial Auto Insurance

The Complete Guide to Commercial Auto Insurance

Find out who needs commercial auto insurance, when, and why.

Compact delivery van for small business on urban city street. Find commercial auto insurance.

Many businesses rely on vehicles for shipping goods, delivering products to customers, transporting clients, and moving between job sites. But a personal auto insurance policy won't cover vehicles used for commercial purposes. That's why it's crucial for businesses to be covered with commercial auto insurance.

Fortunately, an independent insurance agent can help your business get covered with the right type and amount of commercial auto insurance. They'll review your specific business's needs and find the coverage that's most appropriate for the job. But first, here's a deep dive into the specifics of commercial auto insurance. 

What Is Commercial Auto Insurance? 

Commercial auto insurance is a different type of auto insurance designed to cover vehicles used by businesses or for business purposes. Personal auto policies typically exclude coverage for vehicles used for any type of work activities. That's why anyone who owns a vehicle used to do business, whether it's a company or an individual, needs a commercial auto insurance policy. 

Commercial auto insurance is important to protect against the following.

  • Damage to your vehicles
  • Driver injuries
  • Injuries to third parties
  • Damage to third party property

An independent insurance agent can provide many more examples of why commercial auto insurance is important to have, and why it exists as a separate product from personal auto insurance.

What Does Commercial Auto Insurance Cover?

Commercial auto insurance covers your vehicles from many threats and gives your business liability protection in case of an accident. The basics of what it can cover are very similar to your personal car insurance, which can include the following.

  • Liability: Commercial auto liability covers your business from accidents, injuries, and property damage that you’re responsible for. 
  • Uninsured/Underinsured: If another driver is at fault for an accident you're involved in but doesn’t carry any or adequate insurance, this coverage can pay the difference in any medical expenses or property damage. 
  • Medical payments: Covers injuries to passengers in your vehicle, regardless of who was at fault for the accident or injury. 
  • Collision: Collision coverage pays for physical damage to your vehicles if they get damaged by hitting another car or solid object such as a tree, telephone pole, or building. 
  • Comprehensive: Covers your vehicles for other types of physical damage that’s aren't a collision, like from fire, theft, hail damage, falling objects, and even accidents with animals. 
  • Rental expenses: Covers a rental vehicle if your business's vehicle is undergoing repairs.

An independent insurance agent can help you get equipped with all the types of coverage you need to protect your business vehicles. 

What's the Difference between Commercial Auto Insurance and Personal Auto Insurance?

While many of the coverages under commercial auto insurance are the same as with personal car insurance, there are the following two key differences.

  • Vehicle symbols: When you buy commercial auto insurance, the insurance company will assign your policy an auto symbol, meaning you'll have to specifically list all vehicles that need to be covered. If you forget to add a new vehicle you bought, or an employee uses a vehicle that’s not specified, you could be without coverage in case of an incident.
  • Hired and non-owned: Hired and non-owned protection extends coverage to any vehicle that’s used by you or an employee that the business doesn’t own, which could include personal vehicles and vehicles leased or rented by the business. It’s designed to offer temporary coverage in situations, such as an employee borrowing their neighbor's car for the day for business purposes. 

Your independent insurance agent can further explain the differences between personal auto coverage and commercial auto coverage, and why you need each type of policy. 

business vehicle

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Do I Need Commercial Auto Insurance?

Personal auto insurance might cover certain instances of business use of your personal vehicle, but you'd have to clear them with your insurance company up front. If you fail to do so, you could be left without coverage after an incident.

Further, if you use your personal vehicle for your business and get into an accident, it's likely that the third party would still sue your business. Without the liability coverage under a commercial auto policy, your business wouldn't be protected from the lawsuit.

Risks of not having commercial auto insurance

  • Limited or no coverage for accidents during business use of a personal vehicle
  • Costly out-of-pocket payments for injuries, property damage, repairs, etc.
  • The loss of your personal auto policy

An independent insurance agent can further explain the importance of having commercial auto insurance on top of your personal auto coverage.

Who Needs Commercial Auto Insurance?

Commercial auto insurance is needed by anyone who uses vehicles for business purposes. Some examples are:

  • Food vendors and caterers
  • Real estate and sales workers
  • Electricians, plumbers, and HVAC workers
  • Landscapers and plow services
  • Carpenters, painters, and general contractors

If you're unsure of whether you require commercial auto coverage, an independent insurance agent can help answer your questions and find the right policy for you or your company, if applicable.

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. Vehicles typically covered by commercial auto insurance include the following.

  • Cars
  • Vans
  • Service utility trucks
  • Food trucks
  • Pickup trucks
  • Box trucks

Any vehicle that’s owned and titled under a business's name should be insured by a commercial auto insurance policy. Private passenger vehicles used for both personal and business use might also need commercial auto insurance to protect the business from related incidents. 

How Much Does Commercial Auto Insurance Cost?

The cost of your commercial auto insurance policy varies depending on a number of the following factors, including your business's location. 

  • The number of vehicles insured
  • The type and value of vehicles insured
  • The level of risk involved in the use of insured vehicles
  • Your business's claims history
  • Your employees' driving records
  • Your policy's deductible and limits

The average cost of a commercial auto policy for many businesses is $133 per month, or just under $1,600 per year.

An independent insurance agent can help you find exact quotes for commercial auto insurance in your area. 

Who Sells Commercial Auto Insurance?

Commercial auto insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. They know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.

While many insurance companies could create a commercial auto insurance policy for you, finding coverage could also depend on the area you live in. Here are a few of the top companies for commercial auto coverage.

Top companies for commercial auto coverage Star Rating
State Auto
Progressive
5 star rating
West Bend
5 star rating
Westfield
5 star rating
Central Insurance Companies
5 star rating
Travelers
5 star rating
EMC Insurance Companies
5 star rating
business vehicle

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Why Are Independent Insurance Agents Awesome?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.

Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best commercial auto coverage, accessibility, and competitive pricing while working for you.

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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https://www.iii.org/publications/insuring-your-business-small-business-owners-guide-to-insurance/specific-coverages/business-vehicle-insurance

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