How much is commercial auto insurance?

What's going on with commercial auto prices?

Commercial auto prices are on the rise, increasing by an average of almost 10% from the last quarter of 2023 to the first quarter of 2024, according to a recent market survey by The Council of Insurance Agents & Brokers (CIAB), an industry group.

Several factors may be causing the increase, including: 

• A higher volume of commercial auto claim filings
• Supply chain issues and inflation driving up repair costs
• Companies having trouble finding experienced and qualified truck drivers to replace those who are retiring or resigning
• Larger and more frequent jury and settlement awards for car accidents

Though industry factors that contribute to premium increases aren’t always in the business owner's control, understanding the cause can help you better evaluate your company and coverage choices when getting quotes for a new policy or receiving a renewal notice for your current auto insurance policy. 

How much does it cost to insure a commercial vehicle?

The average cost of commercial auto insurance can vary significantly by insurance company and profession. 

For example, small business owners paid an average of $574 per month for commercial car insurance, according to 2023 data from The Hartford. 

Progressive’s average commercial auto insurance cost per month is $270.

At Next Insurance, 23% of business owners pay between $100 and per month, while 37% pay over $200 per month for commercial auto coverage. Twenty percent pay $100 or less per month.

Insureon’s customers pay an average of $147 per month for commercial car insurance. Twenty-six percent pay between $100 and $200 monthly, while 37% pay over $200 and under $100.

How much is commercial auto insurance per month?

Your industry and the risk level it presents are among the factors determining your business’s monthly commercial auto insurance costs. The more likely you are to file a claim and the higher risk your business is, the more you’ll pay for a commercial auto policy. 

For instance, although Progressive’s average business auto insurance policy is $270 per month, for-hire transport truck owners pay an average of $1,041. That’s because they’re usually heavy-duty semi-trucks hauling multi-ton loads of goods long distances. 

If one of these heavy freight trucks were involved in an accident, it would likely result in significant property damage and severe injuries, possibly even death. This type of business presents a much higher risk than a person driving their vehicle to clients’ homes to clean or a restaurant employee delivering pizzas.

Factors affecting commercial auto insurance costs

Besides industry and the associated risk, several other factors affect the cost of commercial auto insurance, including the following:

• Type of coverage: Though you might only need a basic business auto policy, some work vehicles have expensive equipment a basic policy might not cover.  For example, you may need additional coverage if you’re a contractor with a permanently installed toolbox and ladder rack.
• State minimums: Each state sets a minimum coverage requirement, usually around 25/50/25, meaning $25,000 for bodily injury per person, $50,000 for bodily injury per incident and $25,000 for property damage per incident.
• Policy limits: Many business owners find that their insurance needs far exceed their state’s minimum coverage requirements in order to properly protect their assets financially. Higher coverage limits for auto liability can help cover others' injuries and property damage, plus your legal fees if you get sued. Lower limits could result in the business paying the difference.
• Number of vehicles: How many vehicles you own or lease, as well as their size, type and usage, also affects your commercial car insurance premiums. 
• Driving records: The driving and claims history for all company drivers, including you and your employees, will factor into your commercial vehicle insurance policy costs.

How to get quotes for commercial auto insurance

There are several ways to get quotes for commercial auto insurance coverage.

You can go directly to the insurance company to get a quote. Progressive, The Hartford, and Next Insurance and others offer quotes online. You also can call to get a quote over the phone.

If you’re not sure which company would be the best fit for your business, working with an independent insurance agent or broker may be worthwhile. Independent agencies partner with multiple insurance providers; agents will ask questions and have you fill out a detailed questionnaire or application to determine which company will best fit your specific needs and budget. You can also apply through an online agency like Insureon.

There are also a number of online third-party quoting tools that can help you figure out what you’ll pay for commercial auto.

How to lower commercial auto insurance costs

Commercial auto insurance can be expensive, but there are some things you can do to make it manageable. 

“Start with what you can control, i.e., your own and your employee’s driving records and claims history,” says Kari Allen, vice president of sales, e-commerce and partnerships at Insureon. Maintaining clean driving records and only filing claims when necessary is one of the best ways to keep insurance premiums down.

Ensuring your fleet of vehicles is properly maintained and reliable, training your drivers and doing regular inspections are other ways to reduce your risk of accidents and filing claims. Keeping track of maintenance and training records may also result in premium savings.

“When buying a policy you could also choose a higher deductible to save money and lower your premium, but you must make sure the deductible is something you can readily afford,” Allen says.

Bundling your commercial insurance policies with the same company usually qualifies you for a multi-policy discount. You may also be eligible for a multi-car discount for insuring more than one company vehicle. If you qualify for more than one car insurance discount, you can usually stack them together to maximize savings.

You may also receive a reduced rate if you equip your work vehicles with safety features such as ABS brakes, vehicle recovery and alarm systems.

Impact of claims on commercial auto insurance costs

Any claim you file can raise your commercial auto insurance premiums. But so can claims others file since insurance is a shared risk pool. Though insurance companies are there to protect you if you get into an accident, they’re also a for-profit business. When claim severity and costs rise, insurers increase premiums across the board to offset the rising cost. 

Although we call claims accidents, many are preventable. Over 46,000 people died in avoidable crashes in 2022, according to the National Safety Council. Ensuring your drivers are fully trained, never use their phone while driving and always stay alert can help them avoid a preventable accident. 

Another factor that significantly influences commercial auto liability insurance cost is social inflation, with juries awarding ever-higher claim payouts to those injured by commercial insureds. While inflation grew at a rate of 1.7% per year from 2010 to 2018, the size of verdict awards skyrocketed by 51.7%, with settlement payouts being around 38% higher than jury awards.

Supply chain issues, worker shortages, parts costs and enhanced technology safety features are also causing vehicle repair expenses to increase faster than inflation.

Comparing commercial auto insurance providers

Comparing commercial insurance companies is crucial to finding the best low-cost commercial auto insurance. Getting quotes from three to five commercial insurers can help determine which companies have the best rates for your unique needs. 

You can also use our various tools and calculators as a commercial auto insurance cost estimator to get an idea of how much you might pay based on your company drivers’ ticket and claim history, age and vehicle model.

The cheapest option may not be the best option. You’ll want to do business with a company that is on a strong financial footing and that offers good customer service. After narrowing down your choices, check the company’s financial strength ratings through AM Best or other rating agencies along with its customer satisfaction rankings through one of the many insurance consumer surveys done by J.D. Power. 

Common mistakes to avoid when estimating commercial auto insurance costs

Your commercial auto insurance costs can vary significantly by factors like the type of business and vehicles your company owns, drivers’ driving history, where your business operates from, coverage choices and vehicle usage.

Here are a few things to avoid when estimating how much commercial car insurance will cost:

• Thinking it will cost the same as personal car insurance: When comparing commercial vs. personal auto insurance cost, commercial insurance costs more because the risk of claims is higher and more costly than personal insurance.
• Not knowing your drivers’ history: Your drivers’ claims and ticket history will affect your commercial car insurance premiums. Ensure you know their history, and don’t assume they have a clean driving record, as tickets and accidents will increase your costs.
• Not being honest about your vehicle usage: The way you use your work vehicles affects your premiums. Be honest about whether your drivers are commuting, transporting goods or delivering and how often they’re doing each activity. 

The more information you provide while estimating and quoting commercial auto insurance, the more realistic your costs will be when the company issues the policy.