Commercial Auto Insurance

Commercial auto insurance is a type of business insurance that protects company vehicles from liability claims by other drivers. Commercial auto insurance can help your business recover the monetary cost of an auto accident, in the event that you or one of your employees is found to be at fault.

Scan this page for the answers to a dozen more Frequently Asked Questions about commercial auto insurance. This type of insurance policy is designed for vehicles that are used specifically for the purpose of doing business. These are vehicles you own, lease, or rent to run your company. They need auto insurance as much, if not more, than personal vehicles do.

Here are some important FAQs pertaining to commercial auto insurance.

Who needs commercial car insurance?

YOU need commercial car insurance if any of the following statements are true:

  • You are using a vehicle you own, lease, or rent to transport human passengers for a fee.
  • You are using a vehicle you own, lease, or rent to perform a service for monetary gain.
  • The nature of your job calls for higher levels of car insurance liability than the state minimum allowance.
  • You are hauling very heavy objects such as tools, equipment, or other vehicles, or you are towing a trailer to conduct your business.
  • Your employees may operate a vehicle you own, lease, or rent.
  • Your employees drive their own vehicles to conduct your business. This does not include commuting to and from the job.

Commercial auto insurance is necessary for any motor vehicle (such as a car, limo, van, bus, or light truck) that is being used for the purpose of conducting a business. Commercial insurance is needed because a personal auto insurance policy will not cover all the various uses, additional miles, and numerous drivers associated with running a business. Commercial auto insurance coverage can protect you and your business financially from personal injury, liability claims, and property damage caused by the use of any of your company vehicles.

For larger vehicles such as cement trucks, semis, and tractor trailers, you are legally required to purchase commercial truck insurance.

What types of businesses need commercial car insurance?

Car dealerships, furniture stores, auto rental businesses, taxi services, limo companies, bus lines, tour groups, delivery services, freight companies, moving companies, local shuttle companies, warehouses, construction companies, and farms are just a few of the businesses in need of commercial auto insurance. Commercial auto insurance is required for any vehicle that is needed to help run a business.

What types of vehicles are used for doing business?

All different kinds of vehicles are used for all sorts of business purposes, from passenger taxi businesses and delivery services to construction companies and towing services, to cleaning businesses and junk removal, and quite a few others.

Vehicles in need of commercial auto insurance include

  • automobiles that transport human passengers for a fee (such as taxis, limos, and buses)
  • trucks that transport hazardous materials (such as flammable items and toxic waste)
  • Light trucks for deliveries and small moves
  • vehicles that move heavy objects (such as dump trucks that haul dirt or tow trucks that drag cars to the tow yard)
  • vehicles that are used as farming equipment.

Types of business vehicles may include ordinary cars, and/or larger vehicles such as vans, buses, and light trucks, as well as huge vehicles like dump trucks, tow trucks, and tractor trailers, among others. In other words, virtually any vehicle can be used for doing business, but the vehicle must have commercial auto insurance in order to be covered in case of an accident.

Is commercial car insurance more expensive than personal car insurance?

Commercial car insurance is a special type of insurance with more extended coverage than personal car insurance. For instance, commercial car insurance can cover other people (such as your employees) who drive your car, and can also cover many vehicles on the same policy. Premiums are also based on the added risk associated with the additional miles driven in conducting your business.

So it only makes sense that commercial auto insurance will have, on average, a higher premium rate than personal car insurance. However, commercial auto insurance carriers do offer fleet insurance, which can cover the liability cost of many vehicles at a bulk discount.

The cost of commercial auto insurance for you will depend factors like the size of your business, the number of vehicles you want to insure, the types of vehicles you want to insure, and the purpose for which they are being used. It logically follows that a car-sized vehicle meant to carry passengers will be cheaper to insure than a heavy duty tractor trailer.

What types of coverage does commercial car insurance offer?

Commercial car insurance policies offer the same types of coverage that are offered by personal car insurance policies: Liability coverage, property damage insurance, medical payments, combined single limit coverage, comprehensive insurance, collision coverage, uninsured / underinsured motorist insurance (UMI), and rental car replacement are some of the main coverage types available to businesses. Additional coverages may include employees using their own vehicles for the business, or several people using the same vehicle.

Here is a description of some of the coverages offered on commercial auto insurance policies:

Bodily Injury Coverage: This insurance covers liability costs for bodily injury or death to another person, if resulting from an accident that was caused by the commercially insured driver. In most cases, this coverage includes the cost of legal fees.

Property Damage Liability: This coverage offers financial protection in the event that a commercial vehicle accidentally damages someone else’s property. This type of coverage also typically includes the cost of legal defense.

Medical Payments: This is a type of no-fault personal injury protection (PIP). It typically pays the medical expenses of the driver and the passengers in a commercially insured vehicle that is involved in an accident, no matter who is at fault.

Combined Single Limit (CSL): A Combined Single Limits policy basically offers the same dollar amount of coverage per covered incident, whether for injury or property damage, and whether for one person or many.

Uninsured Motorist Insurance (UMI): This insurance typically covers the cost of injury and/or property damage that was caused by someone who was driving without insurance. UMI can also cover hit and run incidents, as well as accidents caused by drivers who do not have enough insurance. This would include most drivers in America, as the state minimum liability limits do not typically cover the costs of real traffic accidents. So most drivers are underinsured.

Collision Coverage: This type of insurance covers the cost of damage to the commercially insured vehicle when it hits, or is hit by, another object, whether the object is another vehicle, another person’s property, or objects found in nature such as trees.

Comprehensive Coverage: Comprehensive coverage is also known as “other than collision” (OTC) insurance. This coverage pays the cost of non traffic accident damage to your vehicle. Covered incidents that may damage your car include fire, floods, falling or flying objects, hail storms, vandalism, and car theft, among other things. Check with your insurer regarding which incidents are covered under your comprehensive commercial auto insurance plan.

Rental Car Coverage: This insurance covers the cost of a rental replacement vehicle, to be used while a business owner’s damaged vehicle is being repaired.

What is the difference between commercial car insurance and personal car insurance?

Commercial car insurance covers various business uses, different vehicle types, and unusual situations that may not be covered under personal car insurance policies.

Commercial auto insurance policies are designed for vehicles that are being used to conduct some sort of business. A commercial auto insurance policy meets the unique needs of each company, in terms of which and how many vehicles will be used, and for what purposes. Personal car insurance policies are more generalized, and may also limit the number of covered drivers allowed for each vehicle.

Therefore, the coverage limits are quite a lot higher for commercial vehicles than they are for personal vehicles. This means higher premiums as well.

Is commercial car insurance tax deductible?

Yes. Commercial auto insurance is a legitimate expense incurred in the running of your business, so why should it not be tax deductible?

However, the commercially insured driver needs to know which form to file with the IRS.

For instance, a self employed individual might be able to make a tax deduction under schedule C, whereas an employee who does not receive mileage or expenses reimbursement might need to file Form 2106 for employee business expenses. Contact the IRS or a competent tax advisor and explain your particular business situation. The agent will let you know which form(s) you need to file.

What are some good insurance companies for commercial car insurance?

Most reputable car insurance companies offer some kind of commercial car insurance. Like any other driver, the business owner needs to shop around to find the lowest premium quote on commercial auto insurance.

Here are just a few major insurance carriers that deal with commercial car insurance policies. This list is by no means exhaustive:

Farmers Insurance: Farmers Insurance has typical liability limits and coverage types for commercial car insurance policies. The company also has a long list of occupation discounts. Call a Farmers agent for personalized service and tailored solutions to all your corporate challenges. For more info, visit

Geico: Geico is a financially strong insurer, which is backed by Berkshire Hathaway. They advertise low rates on all types of insurance in every state. Be sure to include Geico in your comparison study for commercial car insurance. For more info, visit

Nationwide Group: Nationwide offers a written guarantee on repairs and your choice of approved repair shops with each commercial auto insurance policy, plus the usual competitive rates and discounts. For more info, visit

Progressive Insurance: Progressive promises customized coverage to match your business. They cover all kinds of commercial vehicles, including a wide range of trailers. For more info, visit

State Farm Insurance: A State Farm agent can help you determine the deductible amounts and coverage limits on your commercial auto insurance policy. For more info, visit

The Hartford Insurance:  The Hartford features a Fleet Ahead program for commercial vehicle insurers. It helps fleet owners identify and reduce risks. It may also make them eligible for a discount on commercial car insurance. For more info, visit

Can a commercially insured vehicle also be used as a personal vehicle?

A driver can use a company vehicle for personal excursions, but the company vehicle has to be covered under a commercial car insurance policy.

Vehicles owned by people who drive to and from work, without using their vehicles to perform the functions of their jobs, are covered under personal car insurance policies.

In situations where a personal vehicle is insured as a commercial vehicle, and other family members are driving it for personal use, the business owner may need to get a “non owned vehicle” policy.

If you are not sure which situation applies to you, ask an auto insurance agent. Better yet, ask several insurance agents.

Can a personally insured vehicle also be used as a business vehicle?

Yes, but if another driver, such as your employee, uses a personal vehicle to make deliveries, run errands, or any other task related to your business, you may be liable for any accidents in which your drivers are at fault.

Commercial car insurance is necessary for basically any vehicle that is being used to conduct business.

What factors influence premium rates on commercial car insurance?

Many factors can have an impact on the cost of commercial car insurance premiums. Factors will vary by state, city, insurance carrier, and type of business. Here are just a few of the factors that frequently affect the premium rates on commercial auto insurance:

  • Driving Distance: The more you drive, the greater the risk that you will be involved in a traffic accident. The equation is a simple one: Fewer miles equals lower risk equals lower commercial car insurance premiums.
  • Driving Location: Consider your geographic area of operation. Are the crime rates relatively high? Or do you cover more rural areas? This can make a difference to your premium rates.
  • Coverage Amounts: Of course it will cost more money to buy higher amounts of coverage. However, some businesses need higher coverage amounts, such as companies that utilize cargo vehicles.
  • Coverage Types: How much money you spend on premium rates also depends on the types of coverage you need. Most commercial car insurance companies offer everything from basic, state-mandated minimum policies to optional coverages at a higher cost.
  • Vehicle Type: As mentioned, some types of vehicles are more expensive to insure than others. Also, newer vehicles are more expensive to insure than older vehicles are.
  • Vehicle Purpose: Commercial auto insurance premium rates are generally cheapest for vehicles used in construction and farming. The most expensive commercial vehicles to insure are cargo vehicles that carry loads weighing more than five tons. Passenger vehicles are somewhere in the mid range of commercial car insurance premium rates.
  • Employee Driving Records: Employees with bad driving histories will cost you more to insure. Hire employees with clean driving records to avoid this problem.

How can we lower the cost of commercial car insurance?

Go for the discounts! Yes, commercial car insurance policies have discounts similar to personal car insurance policies. For instance, many businesses will take advantage of the multiple auto discount. Adding up discounts is just one way to reduce your commercial car insurance premium costs. Here are a few others:

  • Select a higher deductible. If you really are being conscientious about avoiding accidents, it may not do you any harm to choose a higher deductible, especially if you are handy enough to fix minor mechanical problems yourself. Accepting a higher deductible will lower your auto insurance premium rates.
  • Store your company vehicles securely. If possible, park all of them inside a locked garage. This will help deter theft and resist weather damage, and may score you lower annual premium rates.
  • Hire ONLY drivers with good driving records! Never mind that relative who wants a job. Forget all favors owed to friends. You will save big on premium rates by being very discriminating about your drivers and their safety records. Good drivers cost less to insure.
  • Use only safe, reliable vehicles that are fairly easy to repair and maintain, and equipped with approved anti theft devices.
  • Some car insurance companies will offer a discount if you install a GPS tracking system in your vehicles.

Overall, if you run a business that involves operating one or more motor vehicles, commercial car insurance is key. There is really no way around insuring your company vehicles. So you might as well start searching for free quotes online now.