How much commercial auto insurance do you need?

What commercial auto insurance covers

The first step in determining how much commercial auto insurance you need is to know what foundational coverage types are available and how they protect your business.

Here’s a breakdown of what a commercial auto insurance policy commonly includes:

Coverage type	What it pays for and if required
Liability insurance	Injuries and property damage to others if you’re at fault in an accident. All states require when you buy auto insurance.
Uninsured motorist (UM)	Pays for medical expenses if you or passengers in your work vehicle are injured in an auto accident by someone who doesn’t have car insurance. Uninsured motorist property damage (UMPD) that pays for repairs to your vehicle if the at-fault driver doesn’t have insurance. Required by some states.
Underinsured motorist (UIM)	Pays for medical expenses if you or passengers in your work vehicle are injured in an auto accident by someone who doesn’t have enough liability coverage to cover your medical bills. In some states, it’s bundled with UM and required.
Personal injury protection (PIP)	Pays for medical bills, lost wages, and replacement services (like childcare) if you or your passengers are injured in an auto accident, regardless of fault. Required in some states.
Medical payments (MedPay)	Pays medical expenses for the driver of your vehicle and passengers if they get injured in an accident, regardless of fault. Required in a few states.
Collision	Pays for damage to your vehicle if you hit another vehicle or object, like a fence, pole or building. Not required by states but required by lenders if you have a lease or loan.
Comprehensive	Pays for damage to your vehicle from non-collision events like severe weather, theft, striking an animal, falling objects and vandalism. Not required by states but required by lenders if you have a lease or loan.

You can customize your policy with optional add-ons to protect your small business. Optional coverage offerings vary by company and industry, but may include:

Gap insurance: Covers the difference between the actual cash value of your business vehicle after a total loss from a covered event and the outstanding lease or loan balance.
Hired and non-owned auto (HNOA): Extends your policy’s liability insurance to vehicles you borrow, hire or rent for business purposes. It also covers your employees’ personal vehicles when used for work-related purposes.
Rental reimbursement: Covers a rental vehicle while one of your business vehicles is being repaired after a covered incident.
Roadside assistance: Provides services such as towing, fuel delivery, and battery-jump start for your work vehicles.

What are the recommended coverage limits?

The best way to know which coverage limits are best for your business is to work with an experienced commercial insurance agent. They can assess your company’s needs and risk exposure and recommend the coverages and limits necessary to protect it.

That said, here is general guidance to consider.

Recommended liability limits - and why $1M is often advised

The liability insurance portion of a commercial auto insurance policy is what pays if your driver is responsible for an accident that injures others or damages their property. If your liability limits are high enough, your business could be responsible for the remaining costs, and even a single claim can be financially devastating.

Liability limits explained

Minimum liability limits vary by state and may be sold as split limits or a combined single limit (CSL). Split limits appear as three numbers, such as 25/50/25, meaning $25,000 for bodily injury per person and $50,000 per accident and $25,000 for property damage per accident. A CSL, such as $300,000, provides one total amount the policy will pay for all bodily injury and property damage per accident.

Recommended liability limits

Experts often recommend at least $1 million in liability coverage to protect your business from medical bills, property damage and lawsuits after an at-fault accident. Some businesses may require even higher limits, often $2 million to $5 million, especially if they transport hazardous materials, operate heavy vehicles, or cross state lines.

“A $1 million policy might sound like overkill, but from a risk management standpoint, it's often the minimum prudent choice for businesses with regular road exposure. Defense costs can bankrupt a company – without even a big verdict,” says Joshua Kimura, personal injury attorney at Kimura London & White LLP in Irvine, California. “For liability limits, I recommend a minimum of $1 million per accident, particularly for any business with regular road exposure.”

He estimates that major cases, like a head injury, can reach a verdict or settlement of $500,000 to $1 million or more.

Higher liability limits and more coverage can provide peace of mind and lower your risk of paying significant out-of-pocket costs.

Key fact

Commercial auto insurance costs an average of $147 per month, according to small business insurance broker Insureon.

Other commercial auto coverage recommendations

Uninsured/underinsured motorist recommended limits

Uninsured/underinsured motorist limits are recommended to match your liability limits. So, if you have 25/50/25 liability limits, your uninsured/underinsured motorist limits would be 25/50/25 as well. Or, if you carry $1 million in liability, you’d choose $1 million in UM/UIM as well.

With one out of every three drivers either uninsured or underinsured, according to the Insurance Research Council’s study, UM/UIM is generally advised for any business with regular road exposure.

MedPay or PIP recommended limits

MedPay and PIP recommendations depend heavily on your state’s minimum and maximum requirements. Personal injury protection provides broader benefits, including medical bills, lost wages, and rehabilitation. MedPay is more limited, covering only medical expenses. Because state rules and business needs vary, we recommend speaking with an agent about what makes the most sense for your specific situation.

Physical damage coverage recommendations

Comprehensive and collision insurance will typically cover your business vehicles up to their actual cash value (ACV). The more expensive your vehicles are to replace, the higher your premium will be, but if you want coverage to pay for repairs or replacement if your vehicle is damaged in an accident or other covered events, you should include these coverage types.

Real-world claims show how low limits can put a business at risk, and attorneys see it firsthand.

“As an injury attorney, I've seen firsthand how inadequate commercial auto insurance can devastate a business,” Kimura says. “When a business vehicle is in an accident – whether a delivery truck, service truck, or ride-share vehicle – the potential liability can greatly exceed state minimums. I've represented clients injured by underinsured businesses, and the financial effect usually has an impact on both the injured victim and the business's future.”

Average cost of commercial auto insurance

Commercial auto insurance for a small business averages $147 per month, according to Insureon. However, premiums can vary significantly depending on the type of coverage, the limits, deductibles and other factors previously mentioned.

People ask: Liability, collision, and comprehensive – what’s right for me?

What is the minimum required renters insurance coverage?

Just about every state requires businesses to carry auto liability insurance. States also have minimum levels of coverage. But note that experts warn that the minimums usually aren't adequate to properly protect your business financially. It's a good idea to talk to an agent or broker to figure out what level of coverage you should have.

What about collision and comprehensive? You aren’t legally required to carry either one. But, if you're leasing or financing a vehicle, you're generally required to carry both collision and comprehensive coverage. These policies are often purchased together as a part of a full coverage car insurance policy, which provides the most robust protection. Again, it's a good idea to sit with an expert to figure out the right level of coverage.

Why you need commercial auto insurance

You probably need a commercial auto insurance policy if any of the following scenarios apply for your small business:

Employees drive company cars or their personal vehicles for business purposes.
You own or lease a fleet of vehicles.
You use vehicles to transport goods or people for a fee.
Your business owns a vehicle titled in the company’s name.
You conduct services with your business vehicle.
Your company vehicles have permanently attached equipment used for business purposes.
You advertise your business on your personal vehicle.

How to determine how much commercial auto coverage you need

Figuring out how much commercial auto insurance coverage you need involves evaluating several key aspects of your business. Start by reviewing the factors below to decide how much coverage your business really needs.

1. Type of business

Identify your industry’s risk level. For example, real estate is usually low-risk.

Taxi or rideshare drivers have a higher liability exposure because they transport passengers. Construction and delivery are also high-risk industries due to frequent driving and heavy loads that can cause catastrophic damage in an accident.
High-risk industries normally need higher liability limits.

2. Vehicle type and usage

The size, weight, vehicle purpose, and usage matter when determining your coverage needs.

Larger, heavier vehicles like tow trucks, dump trucks, and semi-trucks can cause significantly more damage in accidents, thereby increasing the business’s liability exposure. Offset that risk by choosing higher liability limits to protect your company's finances and put more risk on the insurance company.
Identify permanently attached equipment (refrigeration, lift gates and tow rigs) that may need specialized coverage.
Consider inland marine or “tools in transit” coverage for unattached tools and equipment in case they get stolen from your vehicle.
Look at cargo insurance if you transport high-value goods, and increase the limits if those goods are hazardous materials.
Estimate annual mileage and frequency of use; more time on the road means more exposure to an accident or other loss.

3. Business size and assets

The more assets your business has, the more liability protection you need.

Larger businesses face greater legal exposure and need more protection (higher limits) than smaller businesses with fewer assets.
Liability coverage helps protect your company’s assets if your business is sued after an accident. The more you have to lose, the more coverage you need.

“The bigger the size of a company, the more the extent of protection required against potential legal actions,” Kimura says.

Social inflation, or people’s opinions that businesses need to take on greater accountability, has led juries to award higher settlements against companies. So-called “nuclear” verdicts are jury awards exceeding $10 million. Of the 1,288 nuclear verdicts the U.S. Institute for Legal Reform analyzed from 2013 to 2022, the second most frequent cases were for auto accidents (23.2%). According to the 2024 study, commercial auto accidents involving tractor-trailers are the most likely to result in a nuclear verdict if the case goes to trial.

4. Contractual requirements

Review contracts and vendor agreements to make certain coverage types and minimum limits are met.

Common situations requiring higher limits include leasing equipment or vehicles, partnering with large corporations, and working with government agencies.

Common mistakes in choosing commercial auto insurance and how to avoid them

Here are some common mistakes to avoid while choosing commercial auto insurance coverage:

Buying personal auto insurance for business use. Personal auto insurance usually doesn’t cover driving for business purposes. If you use your vehicle for work, talk with your insurance agent to determine which policy type is right for you.
Underestimating liability coverage. State minimum requirements may be all you need to drive legally, but not having enough liability insurance could leave you on the hook financially in an accident or lawsuit.
Not including all drivers and vehicles on your policy. Failing to list all drivers – even occasional ones – and vehicles could result in claim denials.
Not getting hired and non-owned auto insurance. HNOA can protect your business if employees use their cars or you rent vehicles for work. If you don’t have HNOA and an employee causes an accident, the injured party can sue the driver and your company since they were driving for business purposes.
Not reviewing contracts or legal requirements. You could lose out on a lucrative contract or breach a legal agreement if you don’t comply with specific coverage types and limit requirements.
Failing to reassess your coverage annually. Review your policy once a year or whenever you add new services, vehicles, or drivers to ensure your coverage is still sufficient.

Step-by-step guide to buying commercial auto insurance

Follow these steps to make sure your commercial auto insurance policy matches your needs:

Assess your business needs. Identify your vehicles, drivers, mileage and what you transport. This information will be needed to get a commercial auto insurance quote and buy your policy.
Determine coverage needs. Use your business profile – with the help of your insurance agent – to determine what coverages are essential, optional and nice to have.
Choose appropriate coverage limits. Match your coverage limits to your business’s risk exposure and the value of your vehicles and attached equipment. Consider commercial umbrella insurance if you need extra liability protection.
Compare insurance companies. Coverage options and rates vary by company. Compare at least three insurance companies to find the policy that best meets your needs, limits your exposure and fits within your budget. While price is important, consider each carrier’s commercial claims process and customer service reputation to help narrow your choices.
Review the policy details carefully. Read the fine print, check for exclusions, confirm all drivers and vehicles are listed and that your coverage limits meet contractual requirements.
Purchase the policy. Once you’ve found the right policy, make a payment to secure the coverage and get your proof of insurance and ID cards for all vehicles.
Review regularly. Your coverage may change as your business evolves. Review your policy at least once a year or when you add or remove vehicles or drivers or make changes to your business.

What our expert says

Q: Is minimum liability insurance enough coverage?

Joshua Kimura Personal injury attorney, Kimura London & White.

"When a business vehicle is in an accident – whether a delivery truck, service truck or ride-share vehicle – the potential liability can greatly exceed state minimums."

FAQs: How much commercial auto insurance do I need?

How much is commercial auto insurance per month?

Commercial auto insurance costs small businesses an average of $147 per month, according to commercial insurance brokerage Insureon. But premiums can vary significantly based on factors like the type of coverage you choose, the limits and deductibles, the number of vehicles and drivers you have, your industry, employee driving records and your company's claims history.

How much liability insurance do I need for a delivery business?

Delivery businesses usually spend a lot of time on the road servicing their customers. The more time you spend driving, the more likely you are to get into an accident. Delivery drivers should have at least $1 million in liability insurance to cover injuries, damage and potential lawsuits.

Is commercial auto insurance required by law?

Almost all states require auto insurance, whether it’s for a personal or business vehicle. Personal car insurance policies don’t typically cover driving for business use, so a commercial auto insurance policy is the best way to protect your assets and meet your state’s minimum coverage requirements.

Is commercial insurance expensive?

The riskier your business is and the more likely you are to file a claim, the more you’ll pay for commercial insurance. Other factors contribute to more expensive commercial auto insurance premiums, including higher vehicle repair expenses due to inflation, the rising cost of healthcare and a greater risk of accidents due to distracted driving.

Medical expenses are expected to increase by 8% in 2025, according to the Health Research Institute (HRI), a part of PwC, one of the nation’s largest accounting firms. In the 2023 Travelers Risk Index, 30% of employees admit to being involved in an accident due to distracted driving, an increase of 19% from the prior year.

Insurance news and trends

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