What is commercial auto insurance?

If your company owns a vehicle, you will very likely need commercial auto insurance. Nearly every state requires commercial auto insurance coverage for business-owned vehicles.

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

Even when commercial auto 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.

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.

Most commercial auto policies include liability insurance to cover your business’s legal costs if one of your employees gets into an accident.

Read more about what commercial auto insurance covers.

Commercial auto insurance does not provide coverage for personal vehicles. If you or your employees sometimes drive personal vehicles for business purposes, consider buying hired and non-owned auto insurance.

Hired and non-owned auto (HNOA) insurance provides liability coverage for vehicles your business uses but does not own. That includes:

• Employee-owned vehicles
• Vehicles leased by a business
• Vehicles rented by a business

Commercial auto insurance policies are designed for commercial vehicles 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 vehicle for work, your insurance company might refuse your claim. That’s why sole proprietors who own a vehicle 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.

At a minimum, your policy must meet state requirements. Your policy should also be able to cover all costs associated with an accident. Otherwise, you could end up paying legal fees and other expenses out of pocket.

Talk with an agent to discover policy options that match your driving situation. Options that cover different risks include:

• Collision coverage, which covers physical damage to your own vehicle in an accident
• Comprehensive coverage, which covers vehicle theft and damage from vandalism, fire, and other causes
• Uninsured or underinsured motorist coverage, which covers damages incurred by another driver who is not adequately insured

You can control the cost of your commercial auto policy by adjusting your deductible. A policy with a higher deductible will cost less, but you’ll have to pay more before you can collect on a claim.

Find more answers to frequently asked questions about commercial auto insurance.