What Is Commercial Auto Insurance & Where to Get It

If your company needs wheels, then it also needs commercial auto insurance.

Commercial auto insurance protects the vehicles you own and use for your business in the event of an accident.

If you own a fleet of vehicles, commercial auto insurance is a must. But even if you use your personal vehicle for business, you might find yourself underinsured if you find yourself in an accident during business hours and need to claim business expenses. Plus, if you have your employees drive their own vehicles to work, a commercial plan would help cover accidents in/to their vehicles during work hours.

Read our complete guide to commercial auto insurance to learn what commercial auto insurance is, what it covers, who needs it, and how much it’ll cost.

What Is Commercial Auto Insurance?

Commercial auto insurance covers your business vehicles if they are involved in an accident. A commercial auto policy covers both bodily injury and vehicle damage, as well as theft and vandalism.

If your business owns or leases vehicles, if you have employees driving their own cars for business, or if you have employees who drive business vehicles, you need a commercial auto plan to ensure that your business can keep on trucking if your vehicles are involved and at-fault in an accident. (But speaking of trucking: If your business owns commercial transport trucks, commercial auto is often not enough coverage. You’ll need to add a commercial trucking insurance plan to your policy.)

What Commercial Auto Insurance Covers

Your commercial auto plan will cover your business vehicles and employees driving their own cars for business-related activities. While certain personal auto policies might cover some business-related costs, most do not, which is why the added security of commercial auto insurance is so important.

Most commercial auto insurance plans cover the following:

• In an accident, regardless of fault, a commercial plan will cover the costs needed for bodily injury and property damage.
• Your insurance will help pick up the costs of accidents caused by uninsured/underinsured drivers. 
• Physical damage to vehicles is covered under this policy whether it was caused by your commercial vehicle or another vehicle on the road.
• Medical coverage is provided for accidents resulting in injuries, possibly including the cost of transportation away from an accident. 
• The policy will cover replacement and repair costs if your commercial vehicle is a victim of theft and/or vandalism. 
• You can be reimbursed or bill your insurance for towing and labor costs.

What Commercial Auto Insurance Doesn’t Cover

Commercial auto insurance will insure most things relating to a vehicle collision, but don’t expect all losses to be covered. Also, don’t forget that like traditional auto insurance, you’ll have to pay your deductible before insurance kicks in after an accident.

Here are some things that aren’t covered by a commercial auto policy:

• You’ll want business interruption insurance to cover a gap in business operations or loss of income after an accident.
• For employee-owned vehicles, commuting accidents would be covered under the employee’s own auto insurance policy.
• Normal wear and tear on commercial vehicles is to be expected — car repairs won’t be covered by this policy, even if your business is affected.
• Personal items lost or stolen in a car are covered under a commercial property plan or a renter’s insurance plan.
• Worker’s compensation claims that arise from an employee’s injury on the job, such as loss of worker income and hospital bills, are covered as part of worker’s compensation.
• Damage Above Your Liability Protection: Once you’ve reached your liability limit, any additional costs are owed by you.

How Is Commercial Auto Insurance Different Than Personal Auto Insurance?

If you’re a sole proprietor and your car is used mainly for commuting, a commercial auto policy may not be necessary. But when is your personal auto insurance enough? It’s important to familiarize yourself with the kinds of coverage you can expect from both commercial auto and personal auto insurance policies. If you know there’s a good chance that the day-to-day use of your business vehicles will put you in a position where a personal auto plan won’t provide you with adequate financial protection, then your best bet is to purchase a policy.

Both Commercial Auto Insurance And Personal Auto Insurance Cover…

Because commercial auto insurance and personal auto insurance are designed to provide coverage for your vehicles and the sticky situations they may wind up in, there are going to be some natural overlaps. Here are key similarities in coverage between the two:

• Property damage liability
• Liability for bodily injury to others
• Personal injuries you sustain
• Collision costs associated with an accident, regardless of who is at fault
• Medical bills, cost of hospitalization, and funeral expenses

And depending on your policy, both may provide coverage for:

• Uninsured and underinsured motorists
• Towing and labor costs
• Rental car and substitute vehicle loaner

Only Personal Auto Insurance Covers…

The biggest differences between a commercial and personal policy are liability limits and coverage in the event of an accident. Because driving a car for personal use generally comes with fewer risks, personal auto insurance is far less comprehensive. In sum, you can expect exclusive coverage for:

• Vehicles driven for personal, non-commercial use
• Personal injuries and associated medical expenses for passengers and third parties

It might come as a surprise that commercial auto insurance doesn’t automatically include third-party liability, but you can get it as an add-on to your policy. If you want third-party liability coverage for when you’re driving vehicles for business-related reasons, you’ll need to purchase garage liability insurance.

Only Commercial Auto Insurance Covers…

In general, a business is going to have more and potentially costlier risks than a single person running errands or enjoying a casual drive. The specific needs for businesses addressed in a commercial policy that go uncovered in a personal policy are:

• Personal injuries and associated medical expenses for employees and passengers
• Vehicle equipment and liability trailer coverage
• Higher liability limits (up to $2 million)
• Loading and unloading exposure
• Hired-vehicle and non-owned vehicle coverage

Do You Need Commercial Auto Insurance?

Are you thinking about your business and trying to determine if commercial auto insurance is the right fit?

If you’re a small business owner that works from home, doesn’t have employees, and doesn’t have a need for a company vehicle, you can skip commercial auto insurance. Your personal auto insurance is probably enough (although we do ask that you check with an insurance expert in your state and determine the insurance policies for your needs).

However, if you can say yes to any of these situations, then you should look into a commercial auto policy:

• You own and operate a fleet of vehicles
• You have a company vehicle that you/employees drive
• Your employees drive their own vehicles for business
• You need a car/vehicle to conduct your business
• Any of your vehicles exceed weight limits or carry over 2,000 pounds

How Much Does Commercial Auto Insurance Cost?

As with all insurance policies, commercial auto insurance costs will vary depending on your needs. Businesses that face higher and more frequent risks will be charged more for their insurance. A food truck or roadside repair service will be charged more than a dance instructor who insures his/her personal car for commuting to and from a studio.

According to Insureon, the median price for commercial auto coverage with a policy limit of $1 million came out to $142 a month in 2022. That rate seems to be comparable to most policy averages which land anywhere between $50 and $200 a month.

Other factors that may affect your insurance costs are:

• Driver age
• Driving record
• Type of vehicle
• Vehicle age and condition
• How far your drivers are driving, how often they are driving, etc.
• How many vehicles you plan to insure
• Types of products hauled inside the vehicles

Adding endorsements will also increase your premiums.

Check with an insurance agent or broker about the different policies available to you. We recommend Nationwide’s small business plans. You can also use aggregate sites to compare prices and find a good match. Places like Coverhound, Insureon, or Coverwallet will compare different companies and help you find the best prices.

Where To Get Cheap Commercial Auto Insurance

If you have vehicles as a business asset, you’ll need business insurance to protect them. But the thought of affecting your bottom line by dishing out money to protect you from what-ifs is understandably stressful. Thankfully, the hunt for cheap commercial auto insurance doesn’t have to be frustrating. Let’s get into where and how you can find a commercial auto plan that won’t break the bank.

For starters, many of the insurance carriers that sell personal auto policies also sell commercial auto plans. Check with your personal auto insurance provider to see what deals are available. Investopedia’s research found that Nationwide offers a wide variety of affordable policies with various limits — some plans don’t even require a deductible. They also found that The Hartford has special discounts available for businesses that want to insure vehicle fleets, and Farmers has competitive rates for single-vehicle businesses.

If you’re looking for ways to cut down on your commercial auto insurance premium, here are specific things you can do:

• Pay your policy in full when you purchase or renew
• Hire drivers with clean driving records
• Raise your deductible to make your premium less expensive
• Look for reduced rates for conducting driving safety meetings
• Ask about special discounts available for the specific coverages you’re seeking

Finally, when you’re ready, you can buy business insurance in four easy steps:

1. Choose the insurance you need
2. Gather business documents (vehicles you need to insure, driver’s ages and driving records)
3. Compare costs
4. Make your purchase

When you send your business automobile out into the world, you can’t control other drivers on the road. But you can control your insurance policy and rest easy knowing that an accident or damage to your vehicle is covered.

Commercial Auto Insurance FAQs