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A personal car insurance policy usually has a number of exclusions when it comes to accidents that take place while you’re on business. That’s where commercial car insurance comes in. Policies can be shaped to fit your business size, coverage needs and more so you get the right protection for the right price.
Compare commercial car insurance
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How does commercial car insurance work?
When accidents happen on the job, personal car insurance won’t cover business vehicles, so you might be on the hook for any damages. Commercial car insurance is designed to protect any vehicle used for commercial purposes, including fleets, tractors and trucks.
Commercial car insurance provides many of the same types of coverage as personal auto insurance, but often includes much more, like higher liability limits and coverage for hired vehicles and employees.
The main factor that separates personal and commercial car insurance is what you’re transporting and why. Designed to protect both businesses and employees, commercial car insurance policies are available in many industries, including:
Joe, like many pizza delivery drivers, uses his own vehicle for work. His personal car insurance covers him on his commute to work, but coverage stops as soon as he clocks in.
If he gets in an accident on the job, damages won’t be covered because the insurance company deems his job as a delivery driver an unapproved use of the car. He could have to pay out of pocket for damages.
Adding a commercial rider or taking out a commercial car insurance policy protects his vehicle while at work.
What kind of commercial coverage do I need?
Just like personal car insurance, there are a handful of different types of commercial car insurance coverage.
Collision coverage. Covers the cost to repair or replace a vehicle after an accident.
Comprehensive protection. Covers damage caused by factors other than an accident. This could include weather damage, theft and vandalism.
Liability insurance. Protects companies and drivers who are considered at fault for damage or injuries caused in an accident.
Medical payments coverage. Pays for the medical costs of drivers or passengers injured in a company vehicle.
Uninsured or underinsured coverage. Provides increased coverage if another driver harms your vehicle or employee and doesn’t have enough insurance to cover damages.
What additional coverage should I consider?
While availability may vary by insurer, location and other factors, these common additional extras can help increase your coverage:
Workers compensation. Pays for lost wages if one of your employees is unable to work following a car accident.
Specialized vehicle coverage. These policies can cover things like vans, trucks, busses, tractors and other vehicles that aren’t covered under a standard policy.
Fleet insurance. If you have a rental car company or dealership, this type of coverage can protect your inventory or fleet.
Personal effects coverage. Covers personal items if they’re lost when stored in a work vehicle.
No-deductible glass repair. Pays for windshield and other glass repairs without you having to pay anything out of pocket.
Gap insurance. Covers the remaining balance on a vehicle if it’s totaled when you still have an outstanding loan.
Fellow employee coverage. Protects your business from claims if one employee injures another.
Towing and labor costs coverage. Provides roadside assistance and covers the cost of towing and labor if company vehicles break down on the road.
Rental reimbursement coverage. Covers the cost of rental vehicles while your insured vehicles are being repaired or replaced.
Non-owned automobile liability coverage. Covers employees driving their own vehicles for your business.
Loading and unloading liability. Liability coverage when loading or unloading a covered vehicle results in injuries.
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Hiscox Business Insurance covers over 400,000 small businesses just like yours. Get a policy customized to fit your company's needs.
The cost of commercial car insurance can vary depending on your choice of provider and many other factors. For example, a simple cargo van for a local caterer or restaurant might cost less than $1,000 annually to insure, while a cab company or limo service could pay $5,000 to $10,000 per vehicle.
How to get cheap car insurance for business
Reduce your risk in these areas if you can and you’ll reduce your premiums.
Vehicles. The type of vehicles you drive will have a direct effect on the cost of coverage due to factors like the value, usage and cost of repairs.
Number of vehicles and drivers. The more drivers and vehicles you want to insure, the more you’ll pay for coverage.
Travel distance. Insurance for local pizza delivery restaurants would likely be cheaper than insurance for a coast-to-coast trucking company.
Coverage types. Just like personal car insurance, the types of coverage you purchase affect your rates.
Coverage limits. Higher coverage limits to pay for more expensive vehicles or cargo will increase the cost of insurance.
Storage area. Where your vehicles are stored will affect insurance.
Location. Accident rates, population density and other factors can vary by location.
Deductible. A higher deductible can help reduce your rates.
Cargo type. If you’re carrying high value or fragile cargo, expect to pay more for insurance.
Credit history. In most states insurance providers check your credit score when you apply for coverage, and a lower credit score could increase your premiums.
Driving history. If you or your employees have poor driving histories or records of multiple claims, you might end up paying more for coverage.
How do I compare commercial car insurance?
As with any major financial decision, it’s important to compare your options before deciding which policy is right for you. Consider these factors:
Coverage limits. Repair and hospital bills can be expensive, so it’s important to find coverage limits that suit your business.
Exclusions. Ask about any potential exclusions to prevent gaps in coverage or denied claims.
Combine commercial policies. If you’re shopping for other types of commercial insurance, find out if providers offer bundling discounts or umbrella policies.
Laws and regulations. Make sure that any policy you consider meets your state’s minimum coverage requirements.
Office locations. If you prefer to deal with your provider or agent in person, make sure there’s an office nearby.
Payment terms. Look for a provider that offers payment terms that meet your businesses needs.
Additional extras. Not all providers offer the same coverage options, so shop around for the best coverage.
Price. Every provider calculates costs differently, meaning pricing for the same coverage can vary. Compare quotes to get the best price and consider a provider that specializes in coverage for your industry.
Fleet management. Many insurers offer safe driver discounts or training programs to help you manage your fleet.
How much commercial coverage do I need?
Every state has different requirements for trucks, much like personal auto insurance. And you’ll also have to contend with your class of truck and sometimes federal regulations on top of that.
State
Passengers (Seating capacity)
Property / Non hazardous
Hazardous
Alabama
1 to 5: $25,000/$50,000/$10,000 5 to 20: $50,000/$200,000/$30,000 21+: $100,000/$500,000/$50,000
$100,000/$300,000/$50,000
Alaska
B.I. $500,000; P.D. $200,000
B.I. $500,000; P.D. $200,000
Arizona
1-8: $250,000 CSL; UM $250,000 9-15: $750,000 CSL; U.M. $300,000 16+: $5 million CSL; U.M. $300,000
20,001-26,000 lbs.: $300,000 CSL
More than 26,000 lbs.: $750,000 CSL
$5 million CSL or $1 million CSL, depending on substance.
Household goods carriers: 250/500/100 or $600,000 CSL Vehicles less than 10,000 lbs.: $300,000 liability Vehicles 10,000 lbs. or more: $750,000 single limit
Intrastate motor carriers petroleum/waste petroleum products: $500/1,000/200 (other than property being transported) or $1.2 million CSL
Colorado
1-8: $500,000 single limit 9-15: $1.5 million single limit 16-32: $3 million single limit 33+: $5 million single limit
Vehicles under 10,000 lbs.: $300,000 Vehicles of 10,000 lbs. or more: $750,000
Connecticut
1-7: $50,000/$100,000/$10,000 or $100,000 single limit 8-12: $50,000/$150,000/$10,000 or $150,000 single limit 13-20: $50,000/$200,000/$10,000 or $200,000 single limit 21-30: $50,000/$250,000/$10,000 or $250,000 single limit 31+: $50,000/$300,000/$10,000 or $300,000 single limitLivery services:1-14 passengers: $1,500,000 single limit 15+ passengers: $5 million single limit
Property carriers: $750,000 CSL Tow truck operations: $500,000 CSL
$1 million to $5 million, depending on specifics
Indiana
1-15: $1,500,000 single limit 16+: $5 million single limit Contract carriers that transport railroad employees: $5 million Also check federal regulations
Vehicles 10,001 lbs. or greater: $750,000 CSL Vehicles GVWR of 10,000 lbs. or less: $300,000 CSL
$1 million or $5 million CSL, depending on substance
Iowa
1-15: $1,500,000 single limit 16+: $5 million single limit Taxicabs 1-6 passengers and not operating on a regular route or between specified points: $1,000,000 Also check federal regulations
Vehicles under 10,000 lbs.: $300,000 single limit Vehicles 10,001 lbs. or greater: $750,000 CSL
$1 million or $5 million CSL, depending on substance
Motor vehicles with a GVW of: 18,000 lbs. or less: $100,000/$300,000/50 Over 18,000 lbs.: $100,000/600/50
Motor carriers of petroleum or petroleum products in amounts less than 10,000 lbs.: $100,000/300/50 Motor carriers of hazardous materials other than above: $1 million CSL
Louisiana
Passenger buses: 250/500/10 Trucks and passenger carrying vehicles: 250/500/10
Tow trucks or wreckers: $500,000 CSL
Maine
School buses
1-30: $500,000 single limit 31+: $1 million single limit
Intrastate vehicles
1-3: $125,000 single limit or 50/100/25 4-7: $300,000 single limit 8-15: $750,000 single limit 16-30: $1,500,000 single limit 31+: $2 million single limit
Interstate vehicles
1-15: $1,500,000 single limit 16+: $5 million single limit
Property carriers: $350,000 single limit
Rental vehicles: 50/100/25
Rental trucks with a registered gross weight of 26,000 lbs. or less, rented or leased for fewer than 30 days: $125,000 single limit or 50/100/25
Maryland
1-7: $50,000/$100,000/$20,000 or $120,000 CSL 8-15: $75,000/$200,000/$50,000 or $250,000 CSL 16+: $75,000/$400,000/$100,000 or $500,000 CSLTaxicabs: $25,000/$50,000/$10,000
$1 million to $5 million, depending on specifics
Massachusetts
1-15: $1,500,000 single limit 16+: $5 million single limit 1-32 passengers, sightseeing or charter bus: $1,500,000 single limit
Michigan
1-9: $1 million CSL 10-15: $2 million CSL 10-15: $1.5 million CSL 16+: $5 million CSL, personal and property protection also requiredLimousines: $1 million CSLTaxicabs: $300,000 CSL
Non-hazardous: $500,000 CSL
Non-hazardous: 100/300/50
Freight vehicles of 10,000 lbs. or more: $1 million CSL
Freight vehicles under 10,000 lbs, hazardous: $1 million CSL
Minnesota
Passenger carriers (must be at least equal to 49 C.F.R. 387.33):
1-15: $1,500,000 (including limousines) 16+: $5 million
Limousines: Minimum aggregate $1.5 million BI; $100,000 PD
Non-hazardous: 100/300/50
$1 million or $5 million CSL, depending on substance (as prescribed by 49 CFR 387.7)
Mississippi
Limits shall be no less than requirements of 49 CFR 387:
1-15: $1,500,000 single limit 16+: $5 million single limit
Vehicles under 10,000 lbs. : $300,000 single limit
Vehicles 10,001 lbs. or greater: $750,000 CSL
Hazardous Substances: $1 million or $5 million CSL, depending on substance
Missouri
Interstate passenger carriers:
1-15: $1,500,000 16+: $5 million
Intrastate passenger carriers:
1-12: 100/300/50 13+: 100/500/50
Interstate property carriers: Gross weight of 10,000 or more: $750,000
$5,000,000 or $1,000,000, depending on type of substance
Wyoming
BI/PD $750,000 CSL or greater as required by federal law
How do I apply for commercial car insurance?
The steps to purchase coverage are different with every provider, but purchasing commercial car insurance isn’t too different than personal car insurance.
Visit your insurer’s official website.
Click Get a quote or call the phone number provided.
Submit all necessary information about the vehicles and drivers.
Commercial car insurance is a great way to protect your employees and vehicles, but there are still a few things to watch out for.
Exclusions. Like most insurance policies, your commercial car insurance policy may have exclusions. This may include intentional damage, improperly licensed drivers, specific driving activities or areas.
Coverage for non-employees and hired vehicles. Unless you purchase the add on, you might not have coverage when driving vehicles not owned by your company.
Equipment. Some policies may not cover equipment inside or on your vehicles.
Cargo. Find out if cargo is covered by a standard commercial car insurance policy or if you need additional cargo coverage.
Coverage limits. Coverage limits vary, so make sure your policy meets state and industry minimums.
Rideshare. Coverage for rideshare vehicles is different than for fleets and other hired vehicles, so discuss your coverage needs with your provider.
License status. Ensure that all drivers have the right license status and that their license is up to date, otherwise you may be denied coverage.
Bottom line
Commercial car insurance is necessary for any business that relies on the use of vehicles for everyday operation. It can protect your vehicles on and off the road and, with the right add-ons, provide additional coverage for other essentials for your business.
But just like any other type of insurance, you’ll get the best rates and policy by comparing your options.
Frequently asked questions
Some personal use is often covered by commercial policies, but you should check with your provider to make sure.
It depends on your policy. Most commercial car insurance policies don’t cover vehicles that are not owned by your company. However, you can usually add rideshare coverage to your policy.
Filing a commercial car insurance claim isn’t much different than filing a personal car insurance claim. Make sure you have all information related to the incident, then contact your agent or provider to get started.
Filing frequent claims may lead to higher premiums, but it depends on your policy, who was at fault and other factors.
Yes. Many providers offer discounts when you purchase multiple types of coverage or insure more than one vehicle. Check with your provider to find out if you’re eligible for any commercial car insurance discounts.
Peter Carleton is a writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading.
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