Contractor's commercial auto insurance
Commercial auto insurance covers legal bills, medical expenses, and property damage if a contractor's business vehicle is involved in an accident.
Why is contractor auto insurance important?
Commuting from the head office to jobsites exposes contractors and construction companies to a high level of risk. A collision could lead to another motorist getting injured, or expensive repairs for your construction truck or van.
An auto accident could cost your small business hundreds of thousands of dollars, especially if another person is injured. Compare that to the average monthly premium of $287 for a general contractor, or $268 for a roofer, and it’s easy to see why commercial auto insurance is the better deal.
How does commercial auto insurance protect your business?
Commercial auto insurance can help pay for lawsuits, property damage, medical bills, and other expenses that arise from an accident. You can buy liability insurance that covers harm to other people and their property, or add physical damage coverage that pays for repairs to your own vehicle.
A commercial auto policy can be tailored to fit a contractor's unique needs. For example, a painter might buy a van insurance policy with low limits, while a demolition contractor may need a truck insurance policy with limits of $1 million or more.
Do I need commercial auto insurance as an independent contractor?
Company-owned vehicles must be covered by commercial auto insurance. This applies whether you work as an independent contractor doing plumbing, electrical work, or carpentry, or you own a limited liability company (LLC) or a sole proprietorship.
Remember, your personal auto policy won't cover business-related driving.
Commercial auto coverage may be required if you:
- Operate a construction or contracting vehicle
- Transport goods or tools and equipment
- Send employees on errands during work hours
State regulations determine how much coverage you need. Your commercial auto insurance must meet your state’s liability insurance requirements.
Find commercial auto insurance requirements in your state
What coverage can commercial auto provide for contractors?
You can tailor your commercial auto insurance policy to meet the needs of your construction or contracting enterprise, whether your specialty is carpentry, landscaping, or commercial building.
This policy offers several coverage options, including:
Legal expenses
If your masonry business or other contracting company is sued over an auto accident, legal fees can get out of hand fast. Without insurance, you may also end up paying a court-ordered judgment or a settlement out of pocket.
Medical costs
If a commercial vehicle owned by a welding contractor's business injures another person, this policy can cover the cost of medical care. You can also opt for personal injury protection (PIP) or medical payments coverage (MedPay), which covers medical expenses for you and your passengers regardless of fault.
Property damage
If a contractor's work vehicle damages a customer's fence or dents another driver's car, their commercial auto policy will help pay for the repairs.
Collision
Collision coverage pays for damage to your construction truck, SUV, or other type of business vehicle, no matter who is at fault.
Non-collision damages
A comprehensive business auto insurance policy can pay for non-collision damages, including vandalism, theft, and fire.
Motorists without insurance
Underinsured motorist coverage / uninsured motorist coverage can help pay for damage caused by drivers who are carrying less than the required amount of insurance, or who do not have any coverage.
Personal or rented vehicles may need additional coverage
If you drive your own vehicle for work, you can insure it with hired and non-owned auto insurance (HNOA). An HNOA policy offers liability coverage for contractors who get into an accident while driving their personal vehicle to conduct company business. It also covers rented and leased vehicles used by your business.
Keep in mind, commercial auto insurance only covers vehicles owned by your business, and personal auto insurance excludes business use, which is why you may need additional coverage.
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How much does commercial auto insurance cost for contractors?
Contractors pay $270 per month for commercial auto insurance on average, or $3,239 annually.
The cost of contractor insurance depends on the policy limits and deductibles you choose, along with other factors like your location.
You can choose to buy basic coverage to meet your state's requirements, or protect yourself with additional coverage options at an increased cost.
What factors affect contractor car insurance costs?
Underwriters look at a wide range of factors when determining the cost of auto insurance for a contractor, including:
- Industry risks: Contractors who drive frequently, transport heavy loads, or work on tight deadlines may see higher premiums for their company vehicles.
- Type of coverage: An auto insurance policy that includes comprehensive coverage will cost more than one that only covers bodily injury and property damage liability.
- Driving records: Contractors and employees with a clean driving history will cost less to insure than drivers who have had accidents, DUIs, or speeding tickets.
- Location: Regions with heavy traffic, high accident rates, or severe weather tend to have higher auto insurance costs.
- Number and type of vehicles: Heavy vehicles like excavators, concrete trucks, and box trucks typically cost more to insure than smaller, less expensive vehicles. Whether you own one vehicle or a company fleet also affects your premium.
- Coverage limits and deductible: You can save money with lower liability limits or a higher deductible. However, make sure your coverage is sufficient for an accident and that you can afford to pay your deductible in a crisis.
- Claims history: A contractor with a clean history of claims can expect lower premiums than someone who has filed a claim on their auto insurance in the past.
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Other policies for contractors to consider
While commercial auto insurance is essential if your business owns a vehicle, it's not the only policy you need. Other types of coverage to consider include:
- General liability insurance: This policy covers injuries and property damage caused by a contractor, such as a handyman who accidentally floods a customer's home. It's sometimes required for a contractor's license.
- Business owner's policy (BOP): A BOP bundles general liability and commercial property insurance at a lower cost than buying them separately. It protects against common lawsuits, theft, and property damage.
- Workers’ compensation insurance: Workers’ comp covers medical costs and lost wages from work-related injuries. Most states require this coverage for businesses with employees, and more states are starting to mandate it for contractors, even if they don’t have employees.
- Owners and contractors protective (OCP) liability insurance: This special kind of liability coverage is often purchased by independent contractors on behalf of a general contractor or project owner to protect that party from costs related to incidents caused by the contractor.
- Professional liability insurance: Also called errors and omissions insurance (E&O), this policy covers professional mistakes and oversights, such as a contractor missing a deadline for a project.
- Surety bonds: These bonds reimburse your clients for financial losses if your company is unable to fulfill the terms of its contract.
- Builder’s risk insurance: Builder’s risk insurance can pay for damage done to a structure still under construction, such as a fire or vandalism at a construction site.
- Contractors pollution liability (CPL) insurance: This type of environmental insurance covers pollution liability risks for contractors, such as silica dust from a construction site that impacts neighboring properties.
- Railroad protective liability insurance: If you’re doing construction work near railroad tracks or crossings, you’ll likely need this special type of liability insurance to protect the railroad company in the event of a lawsuit.
- Cyber insurance: Any contractor who stores customer email addresses, credit card numbers, or other personal information should have a cyber policy. Also called data breach insurance, this coverage handles the significant recovery expenses after a security breach or cyberattack.
Find contractor's auto insurance quotes and buy online with Insureon
Contractors choose Insureon to compare quotes in one place, get expert help, and manage their coverage online. You can fill out our easy online application to get quotes for commercial auto insurance, HNOA, and other types of insurance from top-rated providers.
Our licensed insurance agents can help you find the right coverage for your company cars, pickup trucks, or heavy equipment. Once you select a policy, you can begin coverage and get a certificate of insurance (COI) in less than 24 hours.
The average costs on this page were derived from our data on small business owners in the contracting field who purchased policies through Insureon. Most of our customers have less than five employees, annual revenue ranging from around $50,000 to more than $200,000, and five years or less in business.
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