Commercial Auto Insurance

Every small, large, or independent business has at least one company car. Delivery companies rely on vehicles to make their quota, food trucks essentially operate on the road, and contractors may use a series of trucks or vans for equipment transport. If you regularly use a vehicle for a job or while you’re on the clock, you may have a commercial vehicle. Again, it could be a car, truck, or van. There’s no standard as to what a work vehicle can be. As long as you use it for work of any kind, you qualify (and require) commercial auto insurance.

Any vehicle that is used for work requires commercial auto insurance. Except for New Hampshire and Virginia, every state requires work vehicles to be insured while on the road– similar to personal vehicles. However, a personal auto insurance policy doesn’t cover using your car for business purposes. This can be using it for rideshare or anything relating to your job. Commercial auto insurance is the go-to insurance policy for business owners to ensure all their company cars are insured if any accidents happen.

Like any insurance policy, commercial auto insurance covers medical and property damages sustained while driving a work vehicle. There are also instances of comprehensive commercial auto insurance as opposed to only collision and liability. Commercial auto insurance can cost more than a personal policy, but if you’re running a business, you’ll want to have the coverage so you can continue working. Every good business person needs good insurance. So, here is everything that you need to know before purchasing commercial auto insurance.

What exactly is commercial auto insurance?

An example of a driver with commercial auto insurance would be a semi-truck driver. The driver is not the owner of the truck –the trucking company is. The driver is also on their work clock. Naturally, their personal auto insurance won’t cover them behind the wheel of a work vehicle since it is not being used for personal reasons. In a truck driver’s case, they would receive their insurance through the trucking company they work for. The very least coverage they would receive is liability coverage if they get into an accident on the job.

Commercial auto insurance is a highly specialized policy that covers damages that a personal policy otherwise could not. If the truck has a trailer with equipment inside, then there’s a trailer interchange policy that covers the truck along with everything inside the trailer. There’s also a couple of “rental and hired plans” that cover rental vehicles for employees or work. A non-owned vehicle policy would cover you or your employees when they use their own cars for work. Note that commercial insurance will never cover a personal vehicle.

What are the specific coverages commercial insurance offers?

We’ve discussed the broader coverage that commercial insurance offer drivers using their cars for work. The exact coverage commercial auto insurance provides is not too different from a personal policy.

They are:

Personal injury – Medical payments in the event of an auto accident are something that every driver needs to be insured for. Regardless of the guilty party, you’d be covered under a commercial policy.
Collision – Collision coverage is the best-selling optional plan for auto policies. The one offered with commercial insurance does the same as any would and covers the damages to your vehicle when involved in a crash.
Comprehensive – Anything can happen to your work vehicle; it can be stolen or vandalized. Maybe the truck trailer was looted while you were away. Comprehensive insurance covers non-collision incidents such as these.
Uninsured/underinsured – There’s a number of uninsured drivers out on the road. If you were to become involved in an accident with one of these drivers, then they may not be able to pay for the damage they caused to your vehicle. Uninsured motorist coverage pays for any damages in such an event.

Do I need commercial insurance?

Naturally, if your job involves driving, then commercial insurance is required. It also may be worth looking into if you operate a company using drivers, whether you’re a worker or your own boss; commercial auto insurance is needed for all your business endeavors on the road.

You may need commercial coverage if:

The vehicle title is in the company’s name – As previously discussed, since your workplace owns or leases the vehicle and not you, it’s never to be used for personal reasons. Ownership of the vehicle should always be considered.
The vehicle is used for work – Let’s say that you own the vehicle you use for work. Driving to and from your workplace qualifies as personal use and is, therefore, covered by that policy. It’s when your work clock starts, the use stops being personal.
The vehicle is a big truck or van – The only time a vehicle must be commercially insured, even if they aren’t used for work, is when they weigh at least 10,000 pounds and have a load capacity of 2,000 pounds. The larger trucks with flatbeds or trailers are typically vehicles of this nature.
Transport employees and equipment – Vehicles containing work equipment or paying passengers falls under the business use category. A couple of examples would be a taxi or rideshare driver, a realtor driving customers to properties, or driving construction machines to a site.

Does ridesharing require a commercial policy to some degree?

Unlike a semi-truck driver, a rideshare driver doesn’t require commercial auto insurance. Drivers can use their personal insurance, but it doesn’t fully cover them when working. Instead, there’s a rideshare insurance policy since commercial insurance would be more expensive. The trouble for these drivers begins when they turn on their app and become available for requests; it’s at that point when their personal insurance stops covering them, creating a gap in coverage. Rideshare and commercial insurance prevent this gap in coverage from occurring.

How much does commercial auto insurance cost?

Commercial auto insurance isn’t exactly low cost. The liability limits are usually higher. Extensions are also available for other drivers and vehicles in your company. You can pay anywhere from $80 to $160 on a monthly basis. Most customers report an average of $142. That adds up to around an annual charge of $1,000 to $2,000. Your rates are dependent on the number of vehicles you have for work, vehicle type, risk, claims/driving record, and the liability limits.

You’re unlikely to get a low-cost commercial policy, but there are discounts available to help you save. Companies can save some money when they insure more than one vehicle under a single commercial policy. That’s normally how business owners would insure their fleet of delivery trucks. Insurance companies may give discounts if you’ve been in business for a certain amount of years. Of course, you also have the choice to pay your rates annually instead of monthly. While not a discount, this tactic can help policyholders save.

What if my business doesn’t own the car(s) I want to insure commercially?

There’s plenty of times when a company will use a car they don’t own for business purposes. They may lease or ask their employees to use their own vehicles. Employee-owned and rental cars fall under the hired and non-owned auto (HNOA) category. There is a type of commercial coverage, creatively called HNOA insurance, which offers the liability coverage you need while on the job in a non-company car.

Is there anything else I should know about commercial auto insurance?

The main thing to know about commercial insurance is that it offers everything that personal insurance coverage would but includes more for a higher price.

Here’s what else commercial insurance can do for the policyholder:

Higher liability limits – The minimum premium on a commercial policy is around $500. Liability limits can range from $300,000 to $1,000,0000 per accident. With company cars, there’s a higher associated risk.
Tax deductibles – If you use your car (owned or company) for business, you’re entitled to partial tax deductibles. With a commercial policy, you’ll get full tax deductibles.
Employee(s) coverage – If you’re a business owner and need to insure your employees using company car(s), a commercial policy can cover employees by name or all grouped together.
Extra coverage – A trailer to a truck would be insured under commercial insurance. Any other additional equipment for the job that is contained in the vehicle is also covered.

Has Covid impacted commercial coverage?

COVID-19 has affected business dramatically this past year. Commercial insurers have taken the global pandemic into consideration. Customers who need extra support are given more leniency with their late fees and reduced commercial auto rates. Claims can be filed remotely, and companies now revise customers’ coverage if they weren’t able to drive commercially.

Gig economy driver roles have become more frequent during this time. Some insurance companies have also made it possible to extend existing personal car insurance to drivers using their cars for delivering essentials like food or medicine.

Where can I get commercial auto insurance?

Commercial auto coverage isn’t a hard thing to find. Both national and regional insurance companies carry this policy. At Insurance Navy, we’re able to cover company cars, fleets, and even part-time ridesharers. With business coverage, the focus is to avoid gaps in your coverage when you use a car for work. We shop around and compare quotes for the best commercial coverage for your vehicle or business.