Commercial auto insurance in Texas

What is commercial auto insurance in Texas?

Commercial auto insurance in Texas covers vehicles used for business purposes, such as delivering cargo or visiting clients. It is necessary because personal auto insurance will not cover accidents that happen that occur in the course of business.

Because a business vehicle is often on the road for much of the day – not just commuting to an office – commercial vehicle insurance is usually more expensive than personal insurance due to the added risk.

Is commercial auto insurance required in Texas?

Yes, commercial auto insurance is required in Texas. This means that your business vehicles must carry at least a minimum amount of liability insurance to cover third-party claims of bodily injury and property damage.

But state minimum coverage amounts are rarely sufficient to cover a severe accident. Higher levels of coverage can prevent your business from absorbing the cost of lawsuits and settlements.

You may need additional coverage if you or your employees drive vehicles that transport passengers, carry heavy loads or cross state borders. Check with your agent to ensure you meet the proper insurance requirements.

But note: Liability insurance does not offer protection for your own vehicles. For that, you’ll need collision and comprehensive insurance. Collision pays to repair or replace a vehicle after an accident involving an object or another vehicle, while comprehensive covers damage from non-collision events, such as hail, theft and vandalism.

What does commercial auto insurance cover in Texas?

What your commercial auto insurance policy covers will depend on the coverage options you choose when buying your policy. The following are common coverages found in Texas:

Property damage liability , which is required by law, pays for damages you cause to another party’s vehicle or property.
Bodily injury liability coverage is also mandatory. It pays for injuries if you are at fault in an accident. It covers medical bills, legal expenses, loss of income and funeral expenses.
Personal injury protection (PIP) pays for injuries you or your passengers incur when involved in an accident, regardless of fault.
Comprehensive coverage covers the cost of repairs to your commercial vehicle or its replacement if it is damaged due to bad weather, vandalism, theft or another non-collision event.
Collision coverage covers the cost of repairs to your vehicle when damaged in an at-fault accident, single-vehicle collision or rollover.
Uninsured and underinsured motorist coverage pays to fix your car when you are not at fault but the other party doesn’t have any or enough liability coverage.
Rental car coverage pays for a rental car to continue operations while your vehicle is being repaired.

People ask

Does commercial auto insurance cover personal use?

When employees are permitted to use commercial vehicles, the policy covers accidents that happen on personal trips.

Learn more about the rules regarding commercial vs. personal auto insurance.

How much is commercial auto insurance in Texas?

As mentioned earlier, the average cost of commercial vehicle insurance in Texas is $218 per month, according to Insureon. That’s higher than the national average of $147 per month. For context, Florida has the highest rates among the 25 most populous states at $266 a month, while Indiana has the cheapest rate at $101 a month.

Prices in Texas depend on several factors, including a vehicle's year, make and model. Carriers will also consider the location of the vehicle’s home base and each employee’s driving history.

For example, a pet store in Waco with one cargo van used to make local deliveries will pay less for coverage than a Midland oil-and-gas exploration company that needs to insure a fleet of heavy trucks.

And, of course, the insurance company and a business's coverage options also affect the price.

Expert insight: You may be required to have more coverage if you drive certain types of vehicles, such as a vehicle used to transport people or trucks that carry heavy loads. Check with your agent if you or your employees drive such a vehicle.

How commercial auto insurance works in Texas

Commercial auto insurance works like personal auto insurance in Texas. The liability coverage pays for damages to property or injuries to those who are hit by the business vehicle. The higher your liability coverage, the more money available to pay for damages and injuries.

If you have collision coverage, it will pay to fix your vehicle if it’s involved in a crash. If you have comprehensive coverage, it will pay for losses from a non-collision event, such as theft, vandalism or storm damage. Both comprehensive and collision coverage may have a deductible associated with the repairs, which is your portion of the cost of fixing the vehicle.

Which vehicles are covered by commercial auto insurance in Texas?

Various types of vehicles can be covered by a commercial auto insurance policy. Here are some examples:

Sedans, SUVs and minivans
Commercial cargo vans
Commercial trucks such as dump trucks and tractor-trailers
Pickup trucks
Box trucks
Service utility trucks

Top commercial auto insurance companies

Commercial auto insurance companies are licensed and regulated at the state level, and each state does it differently, which can influence rates. It is wise to shop around for the best commercial auto insurance and look for the cheapest rates. Several national carriers offer insurance in most states, including:

Allstate
Berkshire Hathaway Guard
GEICO
The Hartford
Kemper
Liberty Mutual
Nationwide
Old Republic
Progressive
State Farm
Travelers

Texas minimum coverage requirements

According to the Texas Department of Insurance, vehicles used for commercial purposes in the state must carry the following amounts of minimum liability insurance coverage:

$30,000 in bodily injury coverage per person
$60,000 in bodily injury coverage per accident
$25,000 in property damage coverage

In addition, Texas also requires personal injury protection and uninsured/underinsured motorist (UM/UIM) coverage unless rejected in writing by the insured. These coverage amounts are the same for private passenger vehicles.

You may be required to have more coverage if you drive a vehicle with a state or U.S. Department of Transportation (USDOT) serial number. For example, vehicles weighing less than 26,000 pounds carrying household goods must have at least $300,000 in liability coverage. Goods transported across state lines require at least $750,000 in coverage and vehicles carrying oil must have $1 million in liability coverage.

Not sure how much commercial vehicle insurance your business needs? Visit the Federal Motor Carrier Safety Administration website and check your USDOT serial or docket number or talk with your insurance broker or carrier representative.

Texas also strives to ensure good communication between insurers and business owners during the claims process. In Texas, the insurance carrier must notify a business owner that it received a claim and is looking into it within 15 days of its filing. In this notice, the carrier will let the business know if it needs further information from the business or another party.

What isn’t covered by commercial auto insurance?

While commercial auto insurance is broad in scope, it doesn’t cover every type of loss. Some notable exclusions are:

Intentional damage
Damage from pollutants
Injuries covered by workers’ compensation

How to buy commercial auto insurance in Texas

When buying commercial auto insurance in Texas, experts recommend working with a licensed agent or broker. This person can answer questions about state requirements, provide a quote and help bind an insurance policy. You will need to provide the following information:

The names of your employees, their license numbers and driving histories
The number of vehicles you own, including year, make, model and VIN
What your vehicles are used for (e.g., hauling construction supplies vs. visiting clients)
Annual miles your commercial vehicles are driven
Your business’s physical address
The type and amount of coverage you need

It’s a good idea to keep a copy of your current policy handy when getting quotes to ensure that you’re making an accurate comparison.

Expert Advice

B. Patrick Agnew

A personal injury attorney in Forest, Va

Q: How important is it to check an insurer’s claims handling reputation?

“I often see clients struggle with denials or delays from providers known for poor claims handling. The time and money spent fighting improper denials can be monumental.”

Frequently asked questions

When do you need business car insurance in Texas?

You’ll need business insurance for your vehicle as soon as you buy and register it with your business. If you convert a personal vehicle to a business vehicle, get commercial insurance the day you start using it for business purposes.

How much more expensive is commercial auto insurance than personal auto in Texas?

You can expect to pay about $170 a month for personal auto insurance in Texas, according to rate data from Insurance.com. Compare that to an average of $218 monthly for commercial vehicle insurance in the Lone Star State.

Is Texas commercial car insurance tax-deductible?

The Internal Revenue Service considers most insurance premiums an “ordinary and necessary” business expense, making them tax-deductible on your federal return. It’s a good practice to keep detailed records of all business expenditures – including insurance premiums – to provide to your tax advisor to deduct this expense properly. Note: Texas does not have a state income tax.