Commercial Auto Insurance
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Commercial vehicles are a crucial part of day-to-day operations for most businesses in the U.S. Most small and big companies around the country rely on different types of automobiles for freight and shipping products, delivery of services, moving passengers, and even to travel to work. Businesses’ reliance on automobiles exposes them to risks and unforeseen perils. So, all businesses should consider including commercial auto insurance in their risk management plan.
Vehicles used for commercial operations like cars, vans, trucks, and trailers are prone to accidents, resulting in unwanted financial expenses like repair costs and medical charges.
According to the National Highway Traffic Safety Administration (NHTSA), 5,250,837 police-reported crashes were recorded in 2020.
Moreover, businesses can be held liable if their vehicle is damaged-third-party vehicles and property. Hence, businesses must get the best commercial auto insurance and shield themselves from liability damages and other financial burdens.
What is Commercial Auto Insurance?
Commercial auto insurance is a coverage designed to cover automobiles used for business purposes. For instance, if you own a shipping company, you must insure your delivery vehicles through commercial auto insurance in most U.S. states.
Commercial auto insurance mainly covers vehicle damage during accidents, third-party liability damage, and driver injuries. Commercial vehicles require a special policy because they are more exposed to risks and accidents than personal vehicles.
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Frequently Asked Questions (FAQ)
How much does a commercial auto insurance policy cost?
The cost of a commercial auto insurance policy depends on several different factors. Business owners can purchase a policy that meets the state requirements or choose a higher coverage limit depending on their necessity.
The pricing of a commercial auto policy is affected by factors like:
- Size of your business and type of industry
- Number of vehicles
- Type and model of vehicles
- Risks involved in your business and operations
- Amount and extent of coverage
- Previous claims records
- Amount of Deductible
- Number of employees driving your commercial vehicles
Is commercial vehicle insurance mandatory in the US?
Commercial vehicle insurance is mandatory across 48 states in the US. Only two states, New Hampshire and Virginia, do not require commercial vehicles to be insured compulsorily. However, drivers can still be held liable for damages during accidents and collisions in these states.
Also, the minimum coverage requirements set by your state may not suffice your insurance needs. Hence, we recommend that all business owners consult with an insurance expert to get the right coverage for their commercial vehicles.
What is the average cost of commercial auto insurance in the United States?
The median cost of commercial auto insurance in the US is $1704 per year ($142 monthly), assuming your policy limit is $1 million.
However, costs may vary greatly depending on the type and commercial purpose of the vehicle. For instance, commercial truck insurance can cost $5000 to $25,000 per year, depending on your coverage.
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What Types of Vehicles are covered by Commercial Auto Insurance?
Commercial auto insurance covers all kinds of automobiles used for business purposes like:
- Food Trucks
- Delivery Trucks
- Service Utility Vehicles
- Tractor Trailers
- Pick-up Vans and Trucks
Also, all vehicles that that have a commercial license plate require commercial vehicle insurance mandatorily.
Commercial Auto Insurance Checklist
Getting the right commercial auto insurance can be a meticulous process as it involves a lot of paperwork and technical insurance terms.
Get started by reading our exclusive checklist.
- Questions to ask before getting commercial vehicle insurance.
- Documents and requirements to get coverage.
- How to file an insurance claim for commercial vehicles?
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What Does Commercial Auto Insurance Cover?
Commercial auto insurance coverage includes the following coverage options:
Collision coverage covers accidental damage to your insured business vehicle. It reimburses your expenses related to vehicle repairs and even helps to replace your vehicle in case of total damage.
Comprehensive coverage shields your business from financial burdens resulting from non-collision related damage like vandalism, theft, and extreme weather conditions.
Underinsured/Uninsured Motorist Coverage
Underinsured/Uninsured motorist coverage covers the medical bills if you or one of your employees meets with an accident and an uninsured or underinsured motorist is at fault.
Liability coverage generally includes two types – bodily injury coverage and property damage coverage. Bodily injury coverage covers the medical expenses of the third-party if you are held liable in an accident. Similarly, property damage covers the vehicle damage expenses and property damage costs of the other party if you are at fault. Furthermore, this coverage can cover your legal expenses as well.
Rental Reimbursement Coverage
Rental reimbursement temporarily covers the expenses for a rental vehicle if your insured business vehicle gets damaged in an accident and needs repair.
There are the normal coverage options included in a standard business auto policy. Business owners can also include additional coverage in their policy to protect the contents inside a vehicle as well.
We recommend you consult an insurance expert to buy the best commercial auto insurance policy that covers all your requirements. You can also get matched with top insurance agents in our directory and get a cheap commercial auto insurance policy.
Difference Between Commercial Auto Insurance and Personal Auto Insurance
Understanding the differences between commercial auto insurance and personal auto insurance is pivotal for business owners as the line between a personal vehicle and a commercial vehicle can often seem blurry.
Many small businesses use their personal vehicles for commercial purposes like delivery, and commuting to work . So, does this make commercial auto insurance redundant for such businesses? Absolutely not.
Even if your vehicle has personal auto insurance, it will not cover losses incurred during commercial activities. A personal auto insurance policy is only designed to cover personal driving. Hence, if you use your personal vehicle primarily for commercial purposes, your personal auto insurance will not be obliged to reimburse your expenses.
That is why every business needs to invest in the right business auto insurance coverage. If you and your employees use personal vehicles for some commercial tasks, you should consider getting a Hired and Non-Owned Auto Insurance (HNOA) policy.
Also, commercial automobile insurance is generally more expensive than personal auto insurance as commercial vehicles involve a higher degree of risk than private vehicles.
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