Commercial auto insurance buyer's guide for small businesses

What is commercial auto insurance and why your business needs it

Commercial auto insurance provides liability and physical damage coverage for company-owned vehicles and other cars, trucks and vans used for business purposes. It can cover personal vehicles, food trucks, dump trucks, trailers, limousines, buses and SUVs.

Personal auto policies don’t cover company vehicles and typically won’t cover the use of your personal vehicles for business purposes. That’s why it’s important for business owners to buy commercial auto coverage, which can cover business and personal use. Having the right policy and coverage in place is the best way to protect your business finances.

What types of coverages does commercial auto insurance include?

Most commercial auto policies include a combination of the following:

Liability coverage: Bodily injury and property damage liability pays for damage you or your drivers cause to others during an accident
Collision coverage: Helps cover damages caused by a collision with another vehicle or object
Comprehensive coverage: Helps cover non-collision events, like fire, theft, natural disasters, vandalism and animal damage
Medical payments or personal injury protection (PIP): Can help to cover medical payments for drivers and passengers, depending on the state
Uninsured/underinsured motorist coverage: Pays if another vehicle hits one of your business vehicles and is uninsured or underinsured

You can also include optional coverages to meet your specific needs, like hired auto insurance, which extends your coverage to vehicles you rent, borrow or lease. Any auto coverage and non-owned auto insurance will also cover your employees' personal vehicles if they use them for business purposes.

If your trucks haul cargo or pull trailers, you can also include coverage extending comprehensive and collision coverages to your freight and trailers. Without this coverage, you may suffer financial losses if you lose or damage a customer's freight or trailer.

Expert insight: Commercial auto insurers may cap liability coverage at $1 million. If your assets are more than that, a commercial liability umbrella policy is worth considering.

Which small businesses need commercial auto insurance?

You need commercial auto insurance if you and your employees use vehicles for business reasons, even if you don’t own the vehicle. This includes small businesses that lease or own pickup trucks, vans, cars and other vehicles that transport people, equipment and goods, like delivery services, landscapers, food trucks, construction companies and any company that transports goods, tools or people.

How much commercial auto insurance does a small business need?

Most insurance professionals recommend purchasing enough commercial auto insurance to cover your business assets entirely in case of an auto accident, with liability limits of $500,000 to $1 million for small businesses.

Commercial auto insurance needs vary by business; there is no perfect  coverage amount  for everyone. And commercial auto insurers may cap liability coverage at $1 million. If your assets are more than that, a commercial liability umbrella policy is worth considering, which will kick in if you exhaust the liability limits on your commercial auto policy and other commercial policies, like a general liability policy.

Tailoring commercial auto coverage to match your business risk

The coverage you need depends on your industry, profession, risk, vehicles and business assets. As long as your commercial auto insurance coverage meets or exceeds your state’s minimum requirements, you can tailor your policy to your company’s needs.

For example:

Employees driving their own vehicles for work: Hired and non-owned auto coverage
Leased or financed vehicles: Collision and comprehensive coverage
Transporting goods or equipment: Cargo or inland marine coverage
Multiple drivers or frequent road use: Higher liability limits

Working with an experienced commercial insurance agent is crucial to getting the coverage your business requires. Independent insurance agents work with a network of commercial insurance companies to find the best coverage and policy to protect you from financial losses.

What are the commercial auto insurance requirements in my state?

Each state has its own laws that drivers must follow, whether they’re driving for personal or business purposes. New Hampshire is the only state without minimum coverage requirements. However, drivers are still financially responsible if they cause an accident.

All state laws include some level of liability insurance, which pays for injuries and property damage you cause others. Some states also require other coverages, such as personal injury protection (PIP) and uninsured motorist (UM) coverage. Here are a few examples.

State	Liability insurance coverage minimum requirements	Personal injury protection coverage minimum requirements	Uninsured motorist coverage minimum requirements
Colorado	$25,000 per person, $50,000 per accident for bodily injury$15,000 per accident for property damage
Delaware	$25,000 per person, $50,000 per accident for bodily injury$10,000 per accident for property damage	$10,000 per person, $30,000 per accident
Iowa	$20,000 per person, $40,000 per accident for bodily injury$15,000 per accident for property damage
Missouri	$25,000 per person, $50,000 per accident for bodily injury$25,000 per accident for property damage		$25,000 per person, $50,000 per accident for bodily injury
North Dakota	$25,000 per person, $50,000 per accident for bodily injury$25,000 per accident for property damage	$30,000 per person	$25,000 per person, $50,000 per accident for bodily injury

If your trucks haul property or hazardous materials, you will have to comply with state and motor carrier laws. Failing to meet minimum coverage requirements can result in severe penalties, including fines, jail time, license suspension and vehicle registration suspension.

Which insurers offer commercial auto insurance?

Many auto insurance companies offer commercial policies for small businesses. Here are the top 10 largest commercial auto insurance companies by market share, according to the National Association of Insurance Commissioners:

Progressive
Travelers
Liberty Mutual
Old Republic Insurance Group
Zurich
Berkshire Hathaway
Auto Owners
State Farm
Berkley Insurance
Nationwide

Compare commercial auto insurance quotes

What affects your commercial auto premium and coverage options?

Several factors influence commercial auto insurance costs for your small business, including:

Vehicle type and usage: The number and types of vehicles your business owns and how you use them factor into the cost of business auto insurance.
Driver’s history: The insurance company will consider every driver’s ticket and claims history to determine how much you’ll pay for business auto insurance.
Coverage limits: Higher liability limits and additional coverages, such as hired and non-owned vehicle insurance — which extend your policy’s liability insurance to vehicles you hire, borrow or rent for business purposes — are more expensive, but they provide greater protection for your business. You may also need special coverage if you transport hazardous materials or property.
Business location:  If your business operates in a higher crime rate area or one with more natural disasters, you may pay more for commercial auto insurance coverage.
Deductibles: Comprehensive and collision coverages require you to choose a deductible. Choosing a higher deductible will lower your premium but increase your out-of-pocket costs if you file a claim.

Average commercial auto insurance cost and savings tips

Insurance agency Insureon says its small business customers pay an average of $147 per month for commercial auto insurance. But the reality is that costs will vary widely, depending on factors specific to your business.

Average monthly rates for commercial auto insurance in the five most populous states:

California: $113
Texas: $218
Florida: $266
New York: $172
Pennsylvania: $168

Average monthly rates for commercial auto insurance for five small business types:

Cleaning service: $173
Construction: $173
Food and beverage: $170
Professional services: $163
Trucking: $816

Expert tips to get the best rates on your business auto policy

Shop around and compare quotes: Insurance company underwriting guidelines and risk tolerances vary, meaning you can get wildly different rates from company to company. Comparing commercial auto insurance quotes from three to five companies can ensure you get the best coverage at the lowest price.
Bundle insurance policies: If you bundle your business vehicle insurance with other commercial policies like general liability or workers’ compensation insurance from the same insurer, you can usually get a multi-policy discount.
Maintain a good driving record: You can get better rates when you and your drivers avoid tickets and accidents. You might also land an additional discount if you implement driving safety training and protocols.

Compare commercial auto insurance companies

Add Company

Progressive Insurance Travelers Insurance Old Republic Insurance Liberty Mutual Insurance Berkshire Hathaway Insurance Zurich Insurance Auto-Owners Insurance State Farm Insurance W.R. Berkley Insurance The Hartford Insurance

Add Company

Select a company:

Insurance Insurance Insurance Insurance Insurance Insurance Insurance Insurance Insurance Insurance

Compare Now

loader_image

Frequently asked questions

How do you file a commercial auto insurance claim?

Commercial insurers offer a variety of ways to file an auto insurance claim. Depending on the company, you can file online through the insurer’s mobile app, your local insurance agent or the claims department. Some companies, like Travelers, offer claims worksheets to fill out on their websites, which makes the process smoother.

Does personal auto insurance cover business use?

Though there are exceptions, your personal auto insurance policy generally doesn’t cover business use. That means if you’re running errands for work or driving between job sites and get into an accident, your personal policy may not cover it. 

If you use your personal vehicle for business purposes, you should consider a commercial auto policy, which usually covers work and personal use claims. If you’re an employee and use your own vehicle for work-specific uses, ask your employer if you’re covered under their commercial auto policy