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Commercial Auto Insurance: What You Need to Know

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If you're a business owner or contractor, you need to invest in commercial auto insurance. It may be tempting to cut costs by getting by on your personal auto insurance, but in case of an accident, the special coverage that business auto insurance affords could mean the difference between the life and death of your business. Several factors come into play when determining whether or not commercial auto insurance is necessary, and our team can help you find a policy that fits both your needs and your budget.

What is Commercial Auto Insurance?

Let’s start by defining a commercial vehicle: It’s any vehicle used for business purposes. Commercial auto insurance—also referred to as commercial vehicle insurance, business c insurance, or business auto insurance—is the policy that protects any vehicle you use in the course of business.

Who Needs Commercial Auto Insurance?

There are many instances where you should consider commercial auto insurance for business car purposes:

  • If you operate a business where your employees use personal vehicles on-the-job 
  • You own a food truck or catering business
  • You use a vehicle to transport goods
  • You’re a contractor that carries tools in your vehicle

Without this business insurance coverage, you’re putting your business at risk—and could lose thousands of dollars. If you get in an accident, the costs pile up. You may have to repair or replace your vehicle and anyone else involved in the accident. The cost of medical expenses for you, passengers, and other injured motorists can add up quickly. Add in the case of property damage, possible lawsuits, and even the death of someone injured—you’re looking at astronomical costs. 

What Types of Vehicles are Covered by Commercial Auto Insurance?

Business vehicles can encompass a wide range, from your personal auto in which you deliver your produce to the local farmer's market, to the trucks used for your construction company and beyond: 

NOTE: Some insurance companies require a separate policy for semi-trucks and dump trucks. 

What is Covered Under a Commercial Auto Insurance Policy?

These are some of the coverages your commercial auto policy may include:

  • Auto liability: The most common type of business auto insurance is liability coverage. Most states in the US require liability auto insurance. Liability covers you personally when you are liable for damaging someone’s car or causing injury to a person.
  • Third-party bodily injury liability coverage: If your vehicle is involved in an accident, this part of the policy covers their medical bills, legal expenses if sued, loss of income, and funeral expenses. This can also be referred to as medical payments coverage.
  • Property damage liability coverage: This covers the damage to a third-party's vehicle (repair or replacement). 
  • Personal Injury Protection (PIP): This is coverage that will pay for medical expenses and lost wages for you (the insured) and your passengers injured in an accident. PIP pays whether or not you are at fault. 
  • Comprehensive coverage: Comprehensive covers repairs to or replacement of your vehicle if it is damaged due to the weather, vandalism, or theft.
  • Collision coverage: Collision is another form of commercial auto insurance. Collision insurance will cover the damage that is done to the policyholder’s car as long as the policyholder is at fault. If another party wrecks your car, their liability pays for repairs. 
  • Uninsured and underinsured motorist coverage: Uninsured and Underinsured coverage is required by most states and will cover you if the other party is liable and they do not have coverage. Why is it important? Recent statistics indicate that one in eight motorists does not have car insurance. 
  • Gap Insurance: Gap Insurance will cover the difference between what the car is worth and what you owe as the lessee in the event of an accident that totals the vehicle. Gap Business Auto Insurance is very important for companies that provide leased autos for their employees to drive. 
  • Rental Reimbursement Coverage: Some insurance carriers will help cover the cost of a rental vehicle until yours is replaced (usually capped at a certain length of time).

Why Commercial Auto Insurance Is Important

If your business relies on vehicles for operations, you need to ensure protection. Tailored commercial auto insurance coverage offers comprehensive protection and addresses the risks associated with business-owned vehicles.

Accidents involving commercial vehicles can result in substantial medical bills. That's where a commercial car insurance policy plays a pivotal role. Commercial auto insurance provides financial protection and prevents a potential burden on your business.

Legal challenges from accidents involving company vehicles can be complex and costly. Our commercial vehicle insurance coverage takes care of legal expenses, reducing the financial strain caused by legal disputes.

Business auto insurance coverage is a regulatory requirement, but it's also a strategic investment in risk management and integral to your business operations. From mitigating medical bills to covering legal expenses, commercial auto insurance helps ensure financial security when your business uses vehicles for day-to-day activities.

How Much Does Commercial Auto Insurance Typically Cost?

Because commercial auto insurance covers a wide variety of vehicles, the cost of commercial auto insurance can vary greatly. On average, the annual cost can be between $750 to $3,000 per vehicle. It depends on the type of vehicle, the industry you're in, the policies you're adding, deductibles, coverage limits, and even the insurance company you choose.

Did you know that men under the age of 25 tend to have the highest car insurance rates? Even your marital status can impact the cost of coverage. Married people are thought to be more responsible and tend to be more financially stable compared to single people and are less likely to file questionable claims.

Other Insurance Policies to Consider

Here are some other policies an insurance company might offer under the business auto category:

  • Rideshare Insurance: If you work for Uber, Lyft, or another rideshare company you can obtain a special hybrid policy that covers personal liability, collision, and damage insurance.
  • Commercial Truck Insurance: It varies from insurance company to insurance company, but some do not cover semi-trucks under a normal commercial auto insurance policy. Truck insurance has a variety of different coverages you can add-on to protect your truck.
  • Tow Truck Insurance: This insurance policy is also specialized coverage for those in the towing industry.
  • Fleet insurance: If you own a car rental business you may qualify for fleet insurance—which is typically a better auto policy when you own multiple vehicles.
  • Inland Marine Insurance: A commercial auto policy covers equipment that is permanently attached to your vehicle. However, any tools, materials, or equipment not attached must be covered under a separate policy.
  • Hired and non-hired auto insurance: This auto policy covers vehicles you may rent for work purposes and sometimes personal autos when being used for business purposes.

Let us help you protect your business with commercial auto insurance and keep your mind at ease. At Tivly, our goal is to help you find protection for your business as efficiently as possible by matching you with the right insurance provider. Simply give us a call at 877-907-5267 or complete the form above and one of our specialists will contact you right away.

Reviewed By: Sarah Reid, Licensed Agent

By State: California

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