Commercial Auto Insurance
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Commercial auto insurance

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Commercial auto insurance

Commercial auto insurance covers legal bills, medical expenses, and property damage if a business vehicle is involved in an accident.

Why is commercial auto insurance important?

If your company owns a car or any other type of road vehicle, you will very likely need commercial auto insurance. Nearly every state requires commercial auto insurance coverage for business-owned vehicles, with mandatory liability limits for damage coverage.

New Hampshire and Virginia are the only states where auto insurance isn’t required. However, drivers are still financially responsible for any damages they cause.

You can rely on commercial auto insurance for financial protection if you or an employee needs medical care or faces legal expenses due to an automobile accident. If you don’t carry commercial vehicle insurance, your business will be responsible for any medical bills and legal fees, which can get expensive.

Even when business auto insurance coverage isn’t required, it’s still a smart choice. Without it, you could end up paying thousands of dollars in medical bills and other costs.

A small business owner and their employee loading the company van with deliveries

Businesses that purchase commercial auto insurance often:

  • Have a vehicle titled to their business
  • Drive to and from worksites
  • Carry tools, equipment, or products used for work
  • Transport clients or employees
  • Rely on delivery drivers or couriers

What does commercial auto insurance cover?

Commercial auto insurance helps cover medical payments and property damage related to an accident. This coverage includes legal expenses if you’re sued. A policy may also cover vehicle theft, vandalism, and other losses and damages.

Specifically, commercial auto insurance coverage includes:

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Auto accident liability

Commercial auto insurance includes property damage liability coverage that helps pay for damages in an accident you caused. That could include:

  • Repair costs for the other person's damaged vehicle or property
  • Legal expenses if you're sued over the other driver's injuries
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Medical payments

Commercial auto insurance policies that include medical payments, or bodily injury liability, coverage can pay for:

  • Your medical expenses for bodily injuries from a car accident
  • Medical expenses for passengers in your vehicle

This coverage is available regardless of who caused the accident.

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Physical damage and collision

Commercial automobile insurance protects against vehicle theft and physical damage, as well as provides comprehensive coverage for non-collision damages, such as:

  • Vandalism
  • Fire and certain weather events
  • Impact with another object
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Accidents involving uninsured motorists

About one in eight drivers in the United States are uninsured, according to the Insurance Information Institute (III). When they cause accidents, they might not be able to pay for damages.

Your policy's uninsured motorist coverage makes sure your business doesn’t have to pay for the resulting medical expenses or vehicle repairs.

How much does commercial auto insurance cost?

A small business owner calculating their commercial auto costs

Commercial auto insurance costs an average of $147 per month. 37% of Insureon small business customers pay less than $100 per month for their policies.

Your cost is calculated based on a number of factors, including:

  • Number of vehicles
  • Type of vehicle and value
  • Level of risk involved
  • Claims history
  • Employee driving records
  • Policy deductible and limits
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Who needs commercial auto insurance?

Commercial auto insurance benefits a variety of industries that utilize business vehicles, including cars, trucks, SUVs, and more. It is designed for both businesses and independent contractors that need a company vehicle in order to operate their business.

However, there are a few specific professions who need commercial auto coverage options more often than others, including:

Construction and installation

A HVAC installation employee rear-ends a sports car while driving your construction or installation business’s truck. The accident is the employee’s fault. Your business’s commercial auto insurance policy can cover the cost of repairing the sports car. It can also cover the other driver’s medical expenses for injuries sustained in the crash.

Consulting

A consultant at your IT consulting company is driving to a client’s home when another driver runs a stop sign and hits your company car. The other driver accidentally let his insurance policy lapse and is not insured. Your company car policy can pay for the damage to your car caused by the uninsured driver.

Cleaning

A janitor gets into an accident while driving a cleaning company's van to a client's office. No one is seriously injured, but the janitor is brought by ambulance to a local hospital and given X-rays. The cleaning company's commercial auto insurance policy pays for the ambulance ride and medical treatment.

Landscaping

A tree uprooted by a windstorm falls on a lawn care company’s truck and breaks the windshield. The lawn care business’s commercial auto insurance policy pays for a replacement windshield.

How to get commercial auto insurance

View video transcript.

Are we a drama free bakery? Umm...What? What drama?

Direct hit!

You never really know what will happen. (screaming)

I deliver pastries, and pastry-like items. All these cupcakes aren't going to deliver themselves.

Don't worry, you have commercial auto insurance. You're covered!

Who put that pole there?

Less drama, more treats! Get all the coverage your business needs by clicking this button.

Protection is peace of mind...and a piece of cake.

Complete our easy online insurance application to get free quotes. Insureon's expert insurance agents can help you choose the best commercial auto coverage that meets the needs of your small business.

Your business can acquire business vehicle insurance through a standalone policy, or have it added as an endorsement to a commercial package policy.

Learn more about how to get commercial auto coverage for your business.

What does commercial auto insurance not cover?

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Personal or leased vehicles

Commercial auto insurance does not cover leased or personal vehicles used for business purposes. However, your business can still be held accountable if an employee gets into an accident in a personal or leased vehicle.

Hired and non-owned auto insurance is the appropriate policy for vehicles that your business uses but does not own. This policy will provide protection for employees who drive their own or leased cars for work purposes, such as traveling to and from job sites.

In addition, lease gap insurance is an endorsement you can add to your commercial auto policy that covers the total loss of a leased or financed vehicle. Another endorsement to consider is drive other car insurance, which covers non-owned vehicles that employees or executives may rent or borrow.

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Recently purchased vehicles

If you purchase a business vehicle and it's not yet covered by your commercial auto insurance policy, you would be responsible for any liabilities that may occur to the vehicle.

In order to protect any recently purchased business vehicles, you should get any auto liability insurance, which offers a temporary extension of your commercial auto coverage. It can also cover any hired and non-owned vehicles that you use for your business.

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Customers' vehicles

If your business is storing or performing service on a customer's vehicle, it would be not covered under your commercial auto insurance. If something were to happen to your customer's vehicle, such as damage from a break in, you would be responsible for repair and other related expenses.

Garage keepers liability coverage would insure your customer automobiles while it is in your care, custody and control.

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Garage business risks

If you have a garage-based or auto service business, your commercial auto insurance policy does not protect against common garage operation risks, such as a customer slipping and falling on leaked motor oil.

Garage liability insurance is a type of general liability insurance that covers the many risks associated with automotive business operations. This includes customer injuries and legal costs from lawsuits.

Get commercial auto insurance quotes

Other important policies for small businesses that purchase commercial car insurance

While commercial auto insurance helps protect your company from any incidents involving your business-owned vehicles, there are other common business risks that often require additional coverage.

To be fully insured, small business owners should also consider:

General liability insurance: Liability insurance protects against common business risks such as customer injuries, customer property damage, advertising injury, and copyright infringement. It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts.

Business owner's policy: A BOP bundles general liability coverage and commercial property insurance together into one policy. It protects against the most common third-party lawsuits and property damage, and usually costs less than purchasing each of these policies individually.

Workers’ compensation insurance: This coverage is required in most states for businesses with one or more employees. It covers the medical costs and lost wages over work-related injuries and illnesses.

Professional liability insurance: Also known as errors and omissions insurance, professional liability coverage protects small businesses against the costs of client lawsuits over unsatisfactory work.

Cyber insurance: This policy insures against the costs of data breaches and cyberattacks. It helps cover common items that are required in response to a breach, such as customer notifications, credit monitoring, legal fees, and fines.

Need a policy recommendation? Answer three questions and we can help you find the right coverage for your business.

FAQs about commercial auto insurance

Review answers for frequently asked questions about commercial auto insurance

What is the difference between commercial car insurance and personal car insurance?

While both policies offer personal injury protection, commercial auto insurance policies are designed for company cars that cover a lot of ground. Policies typically have higher coverage limits to account for the increased risk.

Personal auto insurance policies only cover claims related to personal use, including your commute and travel unrelated to work. They have lower limits and usually cost less.

If you’re involved in an accident while driving your personal car for work, your insurance company might refuse your claim. That’s why independent contractors or sole proprietors who own a car used for work should consider commercial auto insurance or HNOA.

If you’re uncertain which policy you need, check with an insurance agent.

Read more about the difference between personal and commercial auto insurance.

What’s the difference between collision coverage and comprehensive coverage?

Collision coverage pays for the damage to your vehicles from an accident involving an object, such as a telephone pole. Comprehensive coverage is for damage caused by something other than a collision, such as fire, natural disasters, falling tree limbs, or hitting an animal. Your policy may have different coverage amounts for collision and comprehensive.

Where can I learn more about commercial auto insurance?

If you want to learn more about this policy, you can find additional answers in our frequently asked questions about commercial auto insurance.

If there are any additional questions you have about coverage or other types of small business insurance you can also contact an Insureon agent and get a free commercial auto insurance quote.

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Cheap commercial auto insurance

Commercial auto insurance is required in most states for small businesses that have company-owned vehicles. However, it can get costly depending on your risk factors, such as your driving history. Learn how you can pay less for auto insurance and still get the protection your business needs.

Updated: June 3, 2024
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