Commercial auto insurance is a type of business insurance used to cover the costs of physical damage and other types of liability coverage. Since a personal auto insurance policy may not be the best fit for businesses, those who have company cars, trucks, and vans may want to look into purchasing coverage for their company.
With the cost of auto insurance rising over time, you may wonder whether commercial auto coverage is necessary in the first place, especially if you already have a personal auto insurance policy in place.
If you already have personal insurance for your car, it may not cover certain coverages for a business vehicle. This is because businesses have different needs and may require customized coverages for business purposes.
In particular, businesses that own, lease, or rent vehicles, including cars or trucks, have employees who drive their own vehicles for business, or have employees who operate leased, rented, or owned company vehicles can benefit from comprehensive coverages offered by commercial auto insurance.
Commercial auto insurance provides various types of commercial coverage, including liability, collision, comprehensive, medical payments (or personal injury protection), and uninsured motorist coverage.
|Bodily Injury Liability Coverage||Pays for the third party's medical expenses in the event of an accident|
|Property Damage Liability Coverage||Pays for any property damage that you or your employees may cause in the event of an accident|
|Collision Coverage||Pays for the cost of repair or replacement for business autos if you hit an object, like another car or a fence|
|Comprehensive Coverage||Pays for business vehicle repairs if the car is damaged from something other than a collision — like theft, fire, vandalism, or hail. For example, if a storm occurs and hail damages your company car, comprehensive coverage may help pay for the cost of repairs|
|Uninsured/Underinsured Motorist Coverage||Pays for the cost of your employee's medical bills or vehicle repairs if they're involved in an accident that's caused by another driver who doesn't have or have enough liability insurance to pay for the resulting expenses|
|Rental Car Coverage||Pays for the cost of renting a vehicle while your company car is being repaired after an accident|
|Medical Payments Coverage||Pays for the cost of medical expenses for your employees and passengers in the car in the event of an accident, such as medical care and the cost of rehabilitation, dental care, or funerals.|
|Personal Injury Protection (PIP)||Pays for the cost of medical expenses, lost wages, or funeral costs after an accident — no matter which party is at fault|
|Hired And Non-Owned Auto Insurance||Pays for lawsuit liability coverage if you or your employees are involved in an accident with a personal, rented, or leased car that was used for business purposes|
It's important to keep in mind that there are some things that aren't covered by a commercial auto policy. This includes things like:
Commercial auto policies tend to have higher coverage limits than personal policies in general because business vehicles need more protection in case of accidents. Some types of vehicles covered by a commercial auto policy include:
However, not all commercial auto policies cover certain types of trucks, including semi-trucks and tractor-trailers. Because of this, it is best to read the terms and conditions of your commercial auto policy based on the needs of your business to check whether it can cover your vehicles.
Commercial auto insurance cost varies depending on the number of vehicles, size, value, business use, and other factors. For instance, construction vehicles that visit a job site may have higher premiums along with food trucks that are often on the road. The driving history of your employees is also something that can impact costs.
On average, the median cost of commercial auto insurance is $142 per month for a policy limit of $1 million. A large number of small business owners pay less than $1,500 per year for commercial auto coverage. However, business owners with larger fleets can expect higher costs for business auto insurance.
In general, a commercial auto policy is a good investment for business owners or their employees who drive to work sites, deliver goods, or haul tools or supplies. Employers should insure cars employees use for work-related driving purposes whether or not they own the vehicle in question.
You’ll likely need commercial vehicle insurance coverage if you:
It can often be difficult to distinguish between a personal vehicle and a commercial vehicle since small business owners and employees may use their personal vehicles for business purposes.
Check out the scenarios below to see when you may need a commercial policy or when a personal policy is sufficient for your needs:
|Commercial Auto Insurance||Personal Auto Insurance|
|Visting several construction job sites every day||Grabbing coffee or meals for co-workers|
|Delivering food to paying customers||Driving friends to a concert|
|Transporting customers for a fee||Driving clients to a work-related event|
|Bringing tools and equipment to the construction site where you're working||Taking a road trip over the weekend|
If your company owns a car, you probably should purchase commercial auto insurance. This is because nearly every state requires commercial auto insurance coverage for business-owned vehicles on a legal basis. As a small business, you probably won't have to pay for a large commercial auto insurance policy.
However, New Hampshire and Virginia are the only states where auto liability coverage isn’t required. Despite this, drivers are still responsible for any damages they cause, and it can be very expensive to pay for legal fees, medical fees, and other costs amounting to thousands of dollars if you don't have car insurance.
Before choosing an auto insurance policy, it's worth comparing several commercial auto coverages from top auto insurance companies. Many of them offer commercial policies in addition to personal auto insurance policies.
Progressive offers plenty of business insurance options for individuals. It is the largest commercial auto insurer in the United States, providing various discounts to lower the cost of your premium, such as the ability to bundle your commercial auto insurance with your personal policy.
|Affordable average premiums for California and New York driversCompetitive rates for drivers with a DUI||More expensive premiums among insurers for teen driversLower scores for customer loyalty|
Geico has had over 70 years of experience in the automobile insurance world. They allow you to combine your coverage with other business insurance plans and bundle together commercial and personal auto insurance as well.
|Good website and mobile appAbove-average levels of customer satisfaction||Lacks rideshare insurance coverageNot that many local agents are available|
Allstate is known for its high quality of customer satisfaction, according to J.D. Power’s annual small-business insurance study. They are one of the top 10 providers of commercial auto insurance by market share in the United States.
|A+ financial strength rating from AM BestProvides discounts based on usageMany discounts for good students and safe drivers||Generally more expensive than competitorsDifficult to deal with for injury claims|
State Farm also has a high customer satisfaction rating that is comparable to Allstate's according to the yearly annual J.D. Power survey. They have a large network of State Farm agents across the United States who help businesses, and individuals get insurance quotes and file claims.
|Provides plenty of discounts for safe driving and young driversBetter than average customer satisfaction rating according to J.D. Power survey||Doesn't offer gap insurance|
To help small businesses decide which insurance coverages are the best fit for their needs, here are some commonly asked questions about the various coverage options on the market today.
In general, the personal use of a business vehicle is covered by a commercial policy. However, coverage for family members isn't typically provided, so it is best to read the terms of your business auto insurance policy before use.
Unfortunately, the majority of business auto insurance policies do not cover the cost of lost possessions. However, you might qualify for protection if you choose to add a rider to your policy. This may cover the loss of specific items commonly stored in the vehicle for business purposes.
Overall, commercial auto insurance tends to cost more than personal auto insurance. This is because commercial policies tend to have higher coverage limits and risks involved depending on the industry or type of vehicle, which can be more beneficial for businesses in the event of an accident.
General liability insurance helps protect you from claims related to bodily injury or property damage caused by your business and those that occur during day-to-day operations. On the other hand, commercial property insurance covers your business's physical assets from things like fire, explosions, burst pipes, storms, theft, and vandalism.
To sum it up, you may need to invest in commercial auto insurance if you transport goods or people for a fee in your vehicle, conduct a service with your vehicle, or need higher limits due to the industry you work in, haul heavy tools or equipment, tow a trailer, or have employees that operate vehicles for business reasons.
Read on to learn more about the other benefits of commercial truck insurance on Assured Standard today!