Commercial Auto Insurance: Everything You Need To Know

This article is a detailed explanation of commercial auto insurance and how you can get one for yourself.

Living in a busy world, you are prone to come across situations that might be out of your control. There are incidents that might harm you mentally, physically, or financially.

Insurance is something that every person should have to avoid any kind of inconvenience in life. Whether it is for business or personal life, having insurance is knowing that you have something to depend upon in case something bad happens.

When you start a business, you need equipment and vehicles that your staff and employees use in order to get the job done. Commercial auto insurance is business-related insurance that ensures you do not suffer from any financial losses in business.

Here is a detailed explanation about all you need to know about commercial auto insurance:

What is insurance?

Insurance is a policy-based contract that is signed between a company and an entity that needs insurance. The policy is based on the category that the insurance covers and is agreed upon by both parties and the government.

Insurance is paid on a monthly basis by the entity to the insurance organization in return for covering the cost and helping with financial losses in case of the agreed situations in the contract.

Many people around the world sign with insurance companies. To be smart is to sign with insurance that covers financial costs for you or help you with financial costs because then you become confident in making decisions to grow and run your business.

What is commercial auto insurance policy?

A commercial auto insurance policy is a type of insurance that covers financial losses related to commercial vehicles like trucks, pick-ups, cars, etc. This insurance policy is totally different from the personal auto insurance policy because it covers the business vehicles that your company uses for commercial purposes only. This insurance is for small businesses and big businesses based on the industry they belong to.

Commercial auto insurance differs depending on the region you live in. Furthermore, there are different insurance policy plans based on the type of business you own. If you have a trading business that involves truck containers, then the plan will be different. If you have a small business that uses vehicles occasionally, then the insurance policy will be different.

What does commercial auto insurance cover?

Commercial auto insurance covers all the needs that a business might need in terms of the vehicle they use. There are so many times that vehicles get into accidents, and the company has to pay all the damages by themselves that can mess up their finances. Some vehicle repairs can be too expensive to be covered, so insurance covers them for you.

There are various plans that cover commercial vehicles based on the role they play in your business. Here are some of the clauses that commercial auto insurance cover:

Liability damages

Liability damages are covered in every insurance type, but commercial auto insurance is different. If a vehicle has some liability damage, the insurance party covers the cost up to some percentage. This means that the insurance will cover the cost of the car you damaged or if you are sued for causing harm to the driver.

For instance, if you hit a car, then the insurance will cover the damage cost of another person’s vehicle.


On the road, there is always a possibility of the commercial vehicle getting into an accident or causing an accident. Commercial auto insurance covers the collision cost that might be caused by a natural disaster or vandalism.

For instance, if there was a flood in your area that caused damage to the vehicle, then the insurance will cover the cost of the damage.

Medical cost

Medical cost is also covered in this insurance. Medical cost is important because when you drive a vehicle, there might be situations when you need medical care due to a vehicle accident or might need to cover the passenger’s medical bill.

Medical bills can be costly, this insurance makes sure that you do not suffer from any financial damages in such a situation. The medical costs are only covered if you or your employee is met with an accident when driving the commercial vehicle.

Property damage

Property damage caused by a vehicle can cost a lot as you have to pay for your vehicle’s repair as well as the property that was damaged. If you or your employee gets into an accident that damages someone’s property, the insurance covers the cost of the damage for you.


There are accidents when you might harm someone through the vehicle and they have the legal right to sue you for the damages. If you are signed to commercial auto insurance, the company can help you in that lawsuit if your commercial auto is involved in the accident.

Lawsuits can get complicated and you might not have time to deal with the situation, so the insurance plan keeps you covered.

Uninsured motorist coverage

There are motorists who cannot afford an insurance plan, so the company has to cover the damages in case they meet an accident. Motorists are most likely to meet accidents because of the unsafe road for them. The insurance covers the medical bills and damages to the vehicles for motorists.

For example, if you hire motorists who need to give out deliveries frequently, the insurance policy covers the damages in case of an accident of the motorist on the road.

Note that the insurance plan never covers 100% of an accident but covers certain deductibles or until a certain limit, after which you can pay the remaining amount. Every insurance plan has its own percentage of coverage because the policies differ for each contract.

Vehicles that commercial auto insurance cover

Commercial auto insurance covers vehicles that are commonly used in business. They are divided into two categories: large vehicles and small vehicles. Large vehicles include food trucks, containers, work vans, box trucks, etc. and small vehicles include delivery motorbikes, business cars, etc. These vehicles vary in terms of their repair cost that only a person with insurance can afford.

There are many vehicles that are used in small and big businesses that are covered by commercial auto insurance once you sign a contract.

What commercial auto insurance does not cover?

The commercial auto insurance policy covers certain situations, and there are situations that it does not cover. It is important that you know the policies well.

These situations include medical bills in case the driver is driving a commercial vehicle. For example, if the driver suddenly has a heart attack while driving, the insurance will not cover the medical bill for it.

If you are driving your personal car for some business purposes and meet an accident, the insurance company will not cover the cost of it. To add more, if you are renting a car for business purposes, even then the insurance will not cover any damages caused to it, but that depends on the type of insurance plan you have signed because some insurance plans offer to cover the cost of rental cars as well.

Every policy differs based on the region and company you sign insurance with.

Commercial auto insurance requirements by state

Many states require you to have commercial auto insurance at all costs. This is the basic requirement that every business needs to have in order to run. Furthermore, it is important that the insurance plan you sign covers the requirements given by the state. Every state has set different requirements based on what they prioritize in business safety.

There are many insurance companies that provide good benefits that can fit your criteria while doing business and the cost of the premium. If you have many business vehicles, you need to buy insurance that agrees with the laws of the state.

There are some of the basic requirements by the state that a business owner has to follow like covering the cost of uninsured motorists and liability damages. To protect the rights of the employees, the state instructs all businesses to have insurance.

Does commercial auto insurance cover personal use?

Commercial auto insurance does not cover the personal use of the vehicle because you have signed the contract for commercial business use only. If you use your personal car for business purposes, the insurance will not cover the damages in case you meet with an accident. But if you use the commercial car for personal use, then the insurance will cover the damages.

Furthermore, if your employee uses their personal car for business purposes, the insurance will not cover any damages that they might cause to their car. For personal use, your personal auto insurance can cover the damage, but commercial auto insurance only covers the business registered cars.

There are some exceptions like if your business car is gone for repairs, some insurance might cover the rented car expenses. But that depends on the plan you sign and agree with. Commercial auto insurance is more expensive and has more liability coverage as compared to the personal one.

Only the commercial cars that are registered under the contract can be covered by the insurance.

Why is commercial auto insurance important?

Commercial auto insurance is very important for any business. It is an essential part of running your company because it ensures safety to the owner as well as the employee.

This insurance is especially important for those businesses who rent cars, have a lease of a vehicle, or even if they own a car that is mainly for commercial use. There are many companies that hire employees to drive their cars for service, they also need to have commercial auto insurance.

The reason for its importance is because this insurance provides comprehensive coverage of any kind of damage. After all, they not only protect your vehicle from collision cost but also in case of theft or vandalism on the vehicle.

Types of commercial auto insurance plans

There are many commercial auto insurance plans that are based on the requirements of the businesses. If you are a small business, you will have different requirements than a big business. Furthermore, it depends on the industry you belong to.

Here are some of the common ones you need to know about:

Customized plans

There are some insurance companies that provide customized commercial auto insurance plans for business owners. We all know that every business has different requirements that are important and not so important for them based on the industry they run for.

These customized plans let businesses choose some policies that suit them well. The party and insurance company sit down and write down the important requirements of the business to agree upon the policies that the insurance companies offer in their policies.

Big vehicle and small vehicle plans

Some businesses use big vehicles to run and some use small ones. As the main focus of their business is transportation, there are commercial auto insurance plans that cover big and small vehicles.

Big vehicles have expensive repair damages, so there is a separate insurance plan for those businesses. Similarly, the financial costs of small cars are different so the policies are made based on those costs.

Single vehicle plan

There are some businesses that only have one vehicle. An insurance plan can cover a single vehicle as well. This business vehicle can be driven by you or your employee, the cost of coverage will be shouldered by the insurance company.

Compare commercial auto insurance

When you are ready to sign up for a commercial auto insurance plan, you need to compare between plans to ensure that you sign the right one for your business. You need to check some of the policies to see that they cover the financial requirement of the commercial vehicle you are going to register for insurance.

Here are some ways you can compare commercial auto insurance:


You need to see the coverage percentage that a certain insurance plan can cover for you. Some cover more, some cover less. This is based on how much premium you can afford to pay. Furthermore, there are deductibles included in every insurance plan that need to be reviewed closely so that you don’t end up paying too much.

The coverage should be able to cover different types of vehicles with a range of offers to choose from and the option to change your coverage whenever you want to without any fines. They should also give you an unlimited road travel radius in the states so that if you take the business vehicle far, the insurance plan covers it well.

Seasonal policy

There are times you might need a seasonal policy in the contract you signed. If your business  It is important that the insurance plan you sign gives you the option of seasonal policy changes.

There are times when you might not need the protection of insurance all year round, but only for a certain season. Then, you can get more discounts and facilities during that time, even if it is for a whole year. The seasonal policy can be beneficial for companies that have the most workload in winter and less in summer or vice versa.

Special discounts

There are some insurance plans that offer special facilities to fleet vehicles. If you have a business that involves fleet vehicles then you need to look for insurance plans that are centered around providing protection.

Your main priority is to see which insurance plans give you special discounts and services that can benefit you in running your business.

Customer service

Compare the best insurance by seeing which one has the best customer service. Customer service plays an important role because you might need to contact insurance during emergencies and get a fast response to deal with situations.

Running a business is already very hectic, so an insurance company that does not waste your time and gets your work done properly on time should be your priority.

How much does commercial auto insurance cost?

Commercial auto insurance involves business vehicles that you need for everyday use. The cost of the insurance plan is based on what you can afford. To add more, you have to pay the insurance on a premium, so if you pay a high premium the benefits will be more.

The industry your company belongs to and the frequency of vehicle use is dependent on the cost of the insurance plan. If you use a vehicle occasionally, then it might not be that expensive as compared to those who use it on a daily basis.

The companies from the contractor industry have to pay more premiums for insurance because they use big vehicles to transfer big equipment. There are other factors as well:

– business type

– vehicle type used by you or your staff

– level of risk

– vehicle claims history

– load that your vehicle carry

– liability coverage you can afford

The average median cost of a commercial auto insurance plan is around $142 premium, and if the small business then it can be estimated around $125 premium. Furthermore, according to statistics, about 44% of small start-ups have to pay less than $1500 per year for insurance plans. But this can vary based on the factors that are mentioned above.

Is commercial auto insurance worth your money?

Even if a certain state does not require you to have commercial auto insurance, you still need to buy this insurance for the sake of the safety and management of your finances. People who chose not to buy insurance have to pay damages from their own pocket, which costs more.

Commercial auto insurance is especially important if you have just begun your business. You need to manage your budget wisely. In case of emergencies, you do not have enough funds to repair the damages caused to or by a vehicle then it can hinder your business. Therefore, buying commercial auto insurance is worth your money.

Although it is expensive, it is still worth the money you pay on a premium.

If your business does not involve any vehicle use or single vehicle use, you can always choose to buy insurance plans that are customized for single vehicles. So that even if you or your employees use the vehicle, your financial cost is saved from any loss.

How to apply for commercial auto insurance?

Applying for commercial auto insurance is easy. Once you have decided which plan is best for you, or what your requirements are from the insurance contract, then you can apply directly to the insurance companies.

Here are two ways to apply for commercial auto insurance:

Broker or agent

If you are unsure about the insurance plan you want to pick, you can hire a broker or agent for discussion. Insurance agents are highly experienced in this field and they know the right plans that are affordable and give the right services that you need.

A broker can look into your business and the industry you belong to and decide which insurance plan you can sign to based on policies. They also help in reading out the policies and explaining them to you, so that you are clear about the contract you are about to sign.

When hiring an agent, make sure they have enough experience in insurance. And if they have dealt with commercial auto insurance then that would make them perfect for the job.


As it is the age of the internet, everything is available online. There are many insurance companies that accept online applications for commercial auto insurance. They give you all the details on the website about each plan. You can choose from those plans which one suits you best.

Applying through application can be tricky if you are unsure about the policies you want, but the easiest way to apply. It takes less effort and it is free.


Now that you have read the article you know everything about commercial auto insurance. Accidents happen all the time despite how much safety a person takes.

If you have opened a new business you know the amount of effort and financial cost one has to cover to keep it running. As a new business, you need to be calculated with your finances and set a certain budget. Insurance ensures that you manage those calculated finances well.

You have all the information you need about commercial auto insurance, so go ahead and apply for it today!

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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