Commercial Auto Insurance: A Complete Guide

Commercial auto insurance, also known as business car insurance, is designed to protect vehicles used as part of a business. Any vehicle can qualify as a commercial vehicle, from cars to vans, if used for commercial use by you or an employee. Not carrying commercial insurance on a vehicle you use for business can leave you open to denied claims and financial losses. 

Read on to learn more about commercial insurance, from what it is to the best auto insurance companies for commercial car insurance. 

Commercial Car Insurance Explained

Commercial insurance is similar to personal auto insurance in regards to what it covers. However, when it comes to commercial vs. personal auto insurance usage, commercial insurance is strictly for business vehicles, whereas personal is strictly for personal vehicles. 

Some of the vehicles that can be covered by company car insurance include: 

• Company vehicles 
• Delivery vehicles
• Food trucks 
• Forklifts 
• Service utility vehicles 
• Trailers 
• Trucks 
• Work vans 

Essentially, any vehicle used for work should be covered under commercial insurance. 

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What Commercial Auto Insurance Covers 

Commercial auto insurance will pay for repairs and medical bills if you are in an accident. It will usually also protect you if you are sued, depending on what level of coverage you purchase. 

Generally, commercial auto insurance will offer a number of different auto insurance coverages to drivers. Take a look at them below:

• Comprehensive coverage. Comprehensive insurance pays for damages from animals, weather, vandalism, theft, and similar incidents. 
• Collision coverage. Collision pays for damages from hitting another car or object, such as a mailbox. 
• Liability coverage. Liability insurance will pay for damage to property and injuries to others if the driver causes the accident. It may also pay legal fees if the driver is sued. 
• Personal injury protection coverage. Personal injury protection insurance pays for the driver and passengers’ medical bills, regardless of who caused the accident. 
• Uninsured/underinsured coverage. Uninsured/underinsured insurance pays for any damages and medical bills if the driver who causes the accident doesn’t have enough insurance or no insurance coverage. 

You can usually add these base insurance coverages to any commercial auto insurance policy. You may also be able to add extras like roadside assistance or GAP coverage. 

Keep in mind that most commercial policies won’t cover any business equipment or tools transported in the business vehicle. Instead, that will be covered under your business insurance policy. 

Common Situations Where Drivers Need Commerical Insurance  

If you use your vehicle in any of the following situations, you should get commercial auto insurance:

• Delivering goods or services
• Driving to your work sites
• Transporting your work tools, equipment, or products 
• Transporting your work clients or your employees

You should also get commercial auto insurance if the vehicle title is under your business name. Whether you are self-employed or a business owner, you’ll need commercial auto insurance if you use your car to earn money. 

Not carrying commercial auto insurance when you use your car commercially can result in denied claims. 

Small Businesses and Commercial Auto Insurance 

Even small businesses need to carry commercial auto insurance, if vehicles are used for business. In addition, independent contractors and self-employed drivers should also carry commercial auto insurance. 

You can often bundle commercial auto insurance with personal auto insurance. So if you are a small business owner, you may purchase commercial auto insurance from your personal auto insurance company to save money. 

Commercial Auto Insurance and Personal Cars

Commercial auto insurance won’t cover personal vehicles, as it is only for business-owned vehicles, which includes independent contractors who own their work vehicle. 

However, if you and your employees use personal, rented, leased, or borrowed vehicles for work, you can purchase hired or non-owned auto insurance coverage: 

• Hired auto insurance coverage. Coverage if you or your employees use a rented, leased, or borrowed car for work-related purposes. 
• Non-owned auto insurance coverage. Coverage if you or your employees occasionally use a personal vehicle for work. 

For example, if you are using vehicles rented or leased from another company to deliver goods, you would purchase hired auto insurance coverage. Essentially, hired and non-owned car insurance coverages are for vehicles a business uses but doesn’t legally own. 

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Difference Between Commercial and Personal Auto Insurance

Commercial auto insurance policies are for cars used solely for business purposes. These policies have higher liability limits than personal auto insurance policies, as there is more risk involved with driving around for work all day than just commuting to work. The higher limit also protects a business from being financially ruined after an accident. 

Personal auto insurance policies are designed for vehicles used solely for personal use, such as commuting to work or running errands. Personal auto insurance policies usually have lower limits and rates than commercial auto insurance policies. 

If you are using a personal car for work, you should purchase non-owned auto insurance coverage. Otherwise, you could be denied a claim after an accident. 

Cost of Commerical Auto Insurance 

Generally, commercial auto insurance costs less than a few hundred dollars per month per vehicle. However, how much you pay for commercial auto insurance depends upon numerous factors. 

Some of the main factors that insurance companies use to determine car insurance rates for business use include: 

• Claim history 
• Employees’ driving records 
• Location of your business
• Number of vehicles insured 
• Risk level of vehicle use 
• Policy limits 
• Policy deductibles
• Vehicle factors 

While commercial auto insurance policies use the same factors as personal auto insurance to determine rates, they aren’t necessarily cheap auto insurance coverages. Because people who frequently drive for work are more at risk of filing a claim, policies will be more expensive to counteract that risk. 

Top Companies for Commercial Car Insurance Policies 

Buying from one of the best companies for commercial auto insurance will ensure you get the best protection for your business vehicle. Take a look at the top companies below. 

Allstate

Allstate is one of the largest insurance companies and has a wide range of coverages in addition to commercial auto insurance. The company also has great customer satisfaction ratings, which is important when it comes to choosing a company. 

Geico

Geico is another popular choice for commercial auto insurance. You can bundle your commercial auto insurance policy with other coverages to earn a discount. Geico also has numerous other discounts that you can take advantage of. 

Progressive 

Progressive is one of the largest insurance companies in the U.S., with solid financial ratings and customer reviews. Additionally, the company offers the option to bundle your commercial auto insurance policy with other types of insurance. Bundling and discounts can help save on your commercial auto insurance policy. 

State Farm 

State Farm is another major company with great customer reviews and offers several other coverages besides commercial. Since there are many State Farm agents, you should be able to find a local agent to speak to about your policy needs. 

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The Final Word on Commercial Auto Insurance 

If your vehicle is used mainly for business, you must purchase commercial auto insurance to protect your assets after a crash. Several popular auto insurance companies offer commercial auto insurance for customers so that you can find commercial auto insurance in your price range. 

Use our free quote comparison tool to find the best rates for commercial auto insurance in your area. 

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