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How Much Does Commercial Auto Insurance Cost?

Drivers in most states are required to carry liability auto insurance or at least a certain amount. It’s always been a legal practice to be able to cover the costs of any injuries you cause to other drivers or damage to their cars in an accident. This practice is also standard and expected of owners of commercial vehicles used for their businesses. But naturally, a business-owned vehicle has some different standards and more expenses to cover in the event of an accident. That also means there are different insurance prices and rates altogether.

At this point in the reading, new business owners may have questions such as “how much are these commercial rates? What influences the cost? And, how much commercial insurance would I personally need?” By the end of this post, all such questions will be answered, along with handy tips on how you can shop for the best commercial coverage.

What is Commercial Auto Insurance?

Commercial auto insurance is a car insurance policy for a vehicle being used for work or while on the clock. Like regular car insurance, commercial car insurance is also grouped into three coverage types -liability, collision, and comprehensive. Liability coverage of any kind is a must-have in most states. It covers property and personal damage of another driver in the event of an at-fault accident. Drivers are usually not allowed on the road without it. Often liability coverage goes by the name “basic coverage.” When collision and comprehensive are added on, it becomes “full coverage.”

Collision coverage is best described as a companion piece for liability coverage. Whereas liability coverage covers the expenses of damage and injury done to another driver, collision coverage covers the damage and injury of the policyholder or driver at fault. Comprehensive insurance is for circumstantial damage while the car is parked or not used. This can be due to weather or crime-related reasons. At the same time, there’s also personal injury protection (PIP) policies and uninsured motorist coverage as well. For simplicity’s sake, the commercial insurance costs we’ll be discussing will only be for basic coverage.

What Are Factors That Can Influence Your Commercial Auto Insurance Costs And Rates?

When it comes to standard auto insurance, a provider will use a multitude of personal information or vehicle details to gauge how much they’ll be paying in insurance premiums or rates. Some of these can include driver’s age, car make and model, and even things like employment history and credit score. How these factors add up is also determined by the insurance company’s home state.

These types of factors, along with the following, can influence your commercial auto insurance cost:

  • How much the vehicle is driven - Naturally, the more often the business or employees use the company car, the higher the risk is for an accident to occur. For example, a truck with a local route would be less to insure than a truck with a statewide route.
  • Where the business operates - The area or location of where the business is based will have an effect on commercial insurance because of crime rates and population. Rural business vehicles are typically less to insure than a metropolitan business one would be.
  • How much coverage the business gets - Outside of the usual liability commercial auto insurance, a business owner may decide to add personal coverage for their company vehicles. This could be any of the coverages mentioned in the last section, like comprehensive and collision.
  • Type of vehicle - Commercial insurance can also be different for specific types of company vehicles. For example, a truck would be more expensive to insure than a van or pickup would. A car is typically measured by its features and attachments and how costly it would be to replace. Make and model also matter.
  • Vehicle use - Work vehicles can be used for employee and equipment transportation, delivery runs, and farming purposes. Typically, people and cargo transportation vehicles are the most expensive to insure, with farming and construction vehicles being cheaper. It all depends on the business’ liability risk.
  • Drivers’ records - This doesn’t refer to the business owner’s driving record, but the drivers’ of the company vehicle(s) own history. Insurance providers may have guidelines for drivers operating something as big as a truck. The better the driving record they have, the lower the insurance premium will be.

What is The Average Cost of Commercial Auto Insurance?

Let’s answer the question right here and now. The average cost for commercial auto insurance, assuming it’s just basic coverage, is anywhere from $50 to $200 a month for each vehicle, or about $600 to $2,400 per year. This is also the average when the vehicle(s) in question are standard-sized cars.

Commercial auto insurance averages for the following vehicles include:

  • Semi - Annual cost of anywhere between $8,000 to $12,500 to insure.
  • Van - Annual cost of anywhere between $3,300 to $6,200 to insure.
  • Limo - Annual cost of anywhere between $4,000 to $6,000 to insure.
  • Cab - Annual cost of anywhere between $5,000 to $10,000 to insure.

Is There Any Way to Lower Commercial Auto Costs?

Anyone who will be spending a significant amount of money always asks the question of how much they could save, or if there are discounts available. The good news is that there are ways beyond choosing a low-cost insurance provider to get reduced rates.

You can lower your commercial auto costs in the following ways:

  • Higher deductibles - The higher a policyholder’s deductible is, the lower their insurance rates will be since the two are directly proportional.
  • Vehicle kept in secure location - Insurance companies give their policyholders discounts based on the safety measures of their vehicle. Where the vehicle is stored is one such measure. Parking areas with locks or other measures can lead to lower rates.
  • Drivers and employees have good driving records - A good part of any hiring process is selecting the very best candidates. Doing this with company drivers and employees can lead to lower insurance premiums if they have a good driving record with little to no traffic violations.
  • Company vehicle safety features - It’s a regular practice for insurance companies to base their rates on a vehicle’s safety features like airbags, rearview cameras, or automatic brakes. The safer the car is, the lower the insurance rates will be. The same applies to commercial vehicles.
  • GPS tracking - If a business owner has their vehicles fitted with GPS tracking devices. They can earn a discount on their commercial insurance. These systems are seen as a theft prevention and safe driving practice.

How Much of Commercial Auto Insurance Required For Businesses?

At the very beginning of this post, we briefly touched on the subject of liability auto insurance. All drivers are required to carry a certain amount of coverage based on how much their state mandates. This includes both standard and commercial drivers. Liability insurance is “connected,” for a lack of a better word, to the vehicle itself, not the driver or the individual. So, business owners have required a certain amount of coverage for each of their vehicles used for work. Many states set their requirements differently, but the commercial requirements of Illinois are $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $20,000 in property damage. Or, as many business owners remember it, “25/50/20” for each of their vehicles. These are the minimum amounts and may not be enough to cover expenses fully in a real accident, so it’s best to carry far beyond these amounts of commercial auto insurance.

How do You Find The Best Commercial Vehicle Insurance?

Business owners can shop for commercial auto insurance the same way a regular driver does -by shopping around and receiving multiple quotes. From there, it’s all about comparing and contrasting. By now, you’re already aware of some factors that insurers look for, like vehicle safety features, good employee driving records, and safe vehicle storage. Now is your chance to see how both local and national auto insurance providers price them.

A good shopping philosophy to go by when dealing with insurance is to compare discounts and how much a given insurance provider will take off the total quote. Another aspect to consider is the state you choose to operate your business out of. States price their commercial auto coverage differently. A notable example is that California commercial auto insurance is cheaper than that offered in Minnesota.

In conclusion, commercial auto insurance is often a requirement for those who use the road for work purposes. These can be delivery services, ridesharing services, regular drives to worksites or clients (not commutes to the office), or equipment transportation for a job. After reading this, you’re now aware of the costs of commercial auto insurance and what exactly determines them. Once you’ve assembled your team of drivers and company vehicles, it’s time to start shopping for the commercial auto insurance policy that you aren’t just able to afford but can still earn a profit while maintaining them.