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Do I Need Commercial Auto Insurance?

Should you carry a commercial auto insurance policy for your business? 

It’s a question many company owners grapple with. The answer depends on the kinds of vehicles you and your employees use in the daily course of business and what they’re used for.

This article explains what you need to know to ensure you have the proper protection for the vehicles you rely on for business.

Do I need commercial auto insurance? 

The answer is surprisingly simple. If you use a vehicle to do tasks related to your occupation, profession, or business, other than commuting to and from work, you need a commercial auto policy. You also need to secure coverage if the people who work for you drive vehicles owned by them, you, or your business for work-related reasons. Personal auto coverage will not pay for damage or injuries resulting from incidents that happen when using a car for business purposes. 

You likely need commercial auto insurance if you or your employees:

  • Transport people or goods for a fee
  • Provide a service using a vehicle
  • Need higher liability limits than personal auto policies provide because of the nature of your business
  • Transport heavy tools or equipment
  • Haul a trailer
  • Drive a vehicle owned by a business, corporation, or partnership

For example, if you own a cleaning service company. You have a car driving your cleaners around places (houses or offices) during the day. That car has to be on a commercial auto insurance policy. Your personal auto insurance policy will be able to provide protection when incidents happen. If you are unsure, a small business insurance expert can advise you on your business auto insurance needs.

What’s the difference between commercial and personal auto coverage?

Commercial auto and personal auto insurance are similar in the protections they provide. The key difference with a commercial policy is that it protects you and your employees when you drive for work, not personal, reasons. 

If someone is involved in an accident or other incident when driving for business, personal auto insurance won’t pay for resulting injuries or damage. Your business will be forced to pay these expenses, which can be considerable, out-of-pocket if you don’t have the proper insurance protection.

Similar to personal auto coverage, a commercial vehicle policy will provide financial protection against personal injury and other liabilities, as well as coverage for collisions and uninsured motorists. You can also purchase comprehensive coverage to insure against vehicle damage caused by risks like fire, theft, hail, and floods.

Commercial auto insurance usually comes with higher policy limits than personal coverage. The point of having it is safeguarding your business assets from lawsuits and other liabilities related to driving for work reasons.

Learn more at the difference between commercial auto and personal auto insurance and why small business owners need to have commercial auto insurance

Do I need both commercial and personal auto insurance?

The short answer is no. You don’t need both commercial and personal auto insurance policies. It is not necessary. If you drive your vehicle for both business and personal purposes, you only need commercial auto insurance policy. That should be sufficient.

Learn more at do I need both commercial and personal auto insurance

Does commercial auto insurance also cover personal driving?

Yes, if you use your vehicle primarily for business purposes, and occasionally drive it for personal reasons too, your commercial auto insurance should also cover your personal driving. You don’t need both commercial auto and personal auto insurance policies.

What are the coverages in a commercial vehicle policy?

Most policies come with the following protections:

  • Bodily injury liability coverage pays for injuries or death resulting from an accident for which you are found to be at fault. In most cases, it covers your legal defense if you’re sued over an incident.
  • Property damage liability coverage provides protection if your vehicle damages another person’s property. Most policies will pay for your legal defense if you’re sued over property damage resulting from an accident where you are found to be at fault.
  • Medical payments, no-fault or personal injury coverage pays the injury-related medical expenses of the driver and passengers in your vehicle that are a result of a covered accident, no matter who is found to be at fault.
  • Uninsured motorist coverage pays for your injuries and, in some cases, property damage caused by an uninsured or a hit-and-run driver.
  • Underinsured motorist coverage is similar to uninsured motorist insurance, but it covers situations where the other driver has inadequate insurance.
  • Collision coverage pays for damage to your vehicle resulting from an accident.
  • Comprehensive physical damage coverage pays for vehicle harm resulting from theft, vandalism, flood, fire, and other covered perils, not accidents.

Another thing to pay attention to is if your policy includes a combined single limit (CSL). Liability policies typically offer separate limits for bodily injury and property damage claims. A combined single limit policy has the same amount of coverage per covered occurrence, whether bodily injury or property damage, one person or several. An insurance professional can help you understand the coverages and levels you need to protect your business.

What kinds of vehicles does commercial auto insurance cover?

Most types of vehicles can be protected by commercial auto insurance, including:

  • Sedans
  • SUVs
  • Light pickup trucks
  • Minivans.

Dump trucks, box trucks, cargo vans, and other larger trucks typically require commercial truck insurance coverage, not commercial auto. A business insurance expert can advise you on your business vehicle insurance needs.

If your business requires some kind of truck, you must have commercial truck insurance. Commercial auto policy will not be sufficient to protect your truck. There are several types of trucks, below are some common ones that you business may use:

How do I get business vehicle protection for my employees?

Employees who drive your insured vehicles will typically be covered under the policy’s terms. And, under most of these policies, your employees’ own cars will be covered when they’re used for company business. Most insurers extend coverage to employees using rented vehicles while working for your business, as well. 

Policies vary. If you’re concerned about protecting the people who work for you, consult with your insurance professional to make sure you have adequate coverage for them.

How much does commercial auto insurance cost?

The average cost of commercial auto insurance is $175 per month, or $2,100 per year. Most small businesses pay between $120 to $250 per month for their commercial auto insurance policy, depending on several factors of the business, the drivers, its location, etc.

These are just the averages. Your rates will be different. Be sure to get several quotes or work with a broker like Simply Business to compare several quotes to find the cheapest one for you.

Learn more at the average commercial auto insurance cost per month

How do I find cheap commercial auto insurance I can afford?

What’s most critical is that you get quotes from several providers to compare coverage and premiums to get the best and the cheapest quote for you. In addition to that, the below tips are also helpful:

  • Keep a good driving record and hire employees with good driving record
  • Choose to drive inexpensive and safe cars
  • Adding safety monitoring tool to your vehicle
  • Choose the right policy details: coverage limits and deductibles. Increasing deductibles and decreasing coverage limits will help reduce the rates

Learn more at how to find cheap commercial auto insurance

Best commercial auto insurance companies

Hundreds of insurance companies offer commercial auto insurance. We have done the research and recommend the 6 best commercial auto insurance companies for your consideration:

  • Progressive: Best Overall
  • biBERK: Best for low-cost coverage thanks to its direct-to-consumer business model
  • Simply Business: Best for comparing several quotes online
  • THREE: Best for affordable comprehensive business and commercial auto insurance
  • The Hartford: Best for comprehensive coverage
  • InsurePro: Best for short-term pay-per-day coverage
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