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Commercial Auto Insurance

Commercial Auto Insurance

If your business owns or leases vehicles, you’ll need to insure those vehicles with Commercial Auto Insurance. Most states require minimum levels of auto liability insurance, and this important coverage can protect your company in the event of an accident involving your business vehicles.

Get a quote on Commercial Auto Insurance

What is commercial auto insurance?

Commercial auto insurance protects the vehicles your company owns or leases and the passengers inside them in the event of an accident. It also provides protection for vehicles owned personally but used for certain business purposes.

Commercial auto insurance has both liability and property components. The liability component protects your business if it is at fault for causing a crash, and causes bodily injury or damages someone else’s vehicle or property. The property component of commercial auto insurance protects the value of your vehicle against crashes, theft, and other perils.


Commercial auto insurance can cover cars, SUVs, light trucks, and vans used for business purposes. It can also cover large trucks, which are normally excluded from personal auto policies, including box trucks, food trucks, service utility trucks, and trailers. Commercial auto insurance is available for small businesses with single vehicles up to businesses with large fleets of vehicles.

Who needs commercial auto insurance?

Your business needs commercial auto insurance if it owns or leases vehicles titled in the name of the business. Most states require every vehicle registered in the state to have minimum levels of liability insurance. In addition, some states also require coverage for uninsured and underinsured motorists. Collision and comprehensive coverages are optional.

If you are a business owner, 1099 contract worker, or even an employee, you may need commercial auto insurance for vehicles owned, leased, or titled in your personal name if the vehicle is:

Commercial auto insurance does not cover employees who drive their personal cars for business purposes. Businesses who have employees driving personal cars for business errands or who hire or rent vehicles for business use should purchase hired and non-owned auto insurance in addition to their commercial auto coverage. Hired and non-owned auto insurance is also available for companies that do not own vehicles or do not need commercial auto coverage.

What does commercial auto insurance cover?

Commercial auto insurance provides coverage for both liability and property. For vehicles that your business owns or leases, liability coverage is required for minimum amounts by most states. Property coverage protects the value of the vehicle your business owns or leases. If you have a lease or loan on your vehicle, the leasing company or bank may require you to have property coverage.

Commercial Auto Liability

The liability component of commercial auto insurance consists of bodily injury liability, property damage liability, and pollution cleanup. Commercial auto liability coverage protects your business if you or one of your employees causes injury or damage to another party while driving and are deemed to be at fault for the crash. The insurer will also help pay for the legal fees to defend your business in court.

Some insurance policies, rather than covering bodily injury and property damage separately, combine the two coverages together into a combined single limit liability coverage. Your coverage will either have both bodily injury liability and property damage liability, or only combined single limit liability.

Most states require all registered vehicles to have minimum bodily injury and property damage liability coverage.

Bodily injury liability provides coverage for your business if you or your employee is at fault for causing a crash that physically injures pedestrians, drivers, passengers in other vehicles, or passengers in your vehicle. Expenses covered include medical expenses, legal fees, loss of income, pain and suffering, and funeral costs.

Usually, there are separate limits “per person” and “per accident,” and the limits are usually expressed per person/per accident, such as: $100,000/$300,000. With these limits, the most the insurance company will pay to each injured person in a crash is $100,000, and the most they will pay for all the people injured in the crash is $300,000.


You can choose your limits of liability, with higher limits requiring higher premiums.

Property damage liability provides coverage if you are at fault for a crash while driving and damage others’ property. The property can be another vehicle or any other property, such as a building or fence.


Combined single limit (CSL) liability is offered by some insurance companies instead of separate bodily injury and property damage liability. For example, if a policy has a combined single limit of $500,000, that is the maximum the insurer will pay for all bodily injury and physical damage claims combined.

Though commercial auto liability will cover most instances of bodily injury or property damage, the costly nature of auto accidents means that insurance companies must make notable exclusions. While you may not be able to receive coverage for some of these exceptions through your commercial auto liability insurance, there are often other avenues for coverage, including through other insurance types like general liability insurance or adding on specific protections via endorsements.

Pollution cleanup coverage provides funds for cleanup costs if you or your employee is at fault in an accident that causes the covered vehicle to leak pollutants. This coverage only applies in situations where property damage or bodily injury covered by the policy has occurred. It covers pollutants that are part of the vehicle’s normal operation, such as gasoline, motor oil, or coolant. Pollution cleanup coverage also applies in situations where pollutants are released due to a covered vehicle damaging, upsetting, or overturning a container holding the pollutants.


Commercial Auto Property

The property component of commercial auto insurance, also known as physical damage coverage, protects the value of your vehicle. There are two coverages: collision and comprehensive.

Collision coverage pays for physical and mechanical damage to your vehicle when it hits or is hit by an object or another vehicle.


Comprehensive coverage pays for any losses to your covered vehicles that are not covered by collision coverage. This may include theft, vandalism, falling objects, fire, glass breakage, and flooding.


Specified causes of loss coverage is a more limited version of comprehensive coverage. This coverage specifies the risks covered, rather than offering broad, all-risks coverage, and it is also generally less expensive, given the narrower scope of coverage. Covered causes of loss typically include theft, fire, explosion, lightning, windstorm, hail, earthquake, flood, and vandalism.

Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage is required in some states. This coverage can be added as an endorsement to your commercial auto policy and protects your company if one of your employees is involved in an accident with an uninsured or underinsured motorist.

Uninsured Motorist Coverage

Although it is against the law in most states, some people drive vehicles without obtaining the required insurance. Another vehicle without insurance may crash into your company-owned vehicle, causing injuries to your driver and other passengers. Even though the other vehicle is at fault, since they don’t have insurance, there may not be money to pay for the injuries to the occupants of your vehicle.

Uninsured motorist coverage exists to cover this risk. In the event the other vehicle doesn’t have insurance, your uninsured motorist coverage will pay for the injuries to your driver and passengers.

Underinsured Motorist Coverage

Most states require low minimum required amounts of liability insurance, such as $50,000 per accident. In serious crashes where your driver is not at fault, this amount may not be sufficient to pay for all the medical expenses for your driver and passengers, which may exceed hundreds of thousands of dollars.

Underinsured motorist coverage will cover the expenses for bodily injury that exceed the limits of the other driver’s insurance.

Medical Payments Coverage

Medical payments is a no-fault coverage, which provides payments for any medical and funeral expenses for the driver of your vehicle as well as any passengers in your vehicle. It pays out regardless of who is at fault for the crash. Medical payments coverage usually has a lower limit of liability, which is around $10,000-$30,000. This coverage can be added to a commercial auto insurance policy through an endorsement.

What are the key exclusions to commercial auto insurance?

Commercial auto insurance covers most instances of bodily injury and property damage, but there are a number of key exclusions.

Common exclusions to liability coverage include:

Excluded causes of loss for physical damage coverage include:

How much does commercial auto insurance cost?

The average cost of commercial auto insurance in the U.S. for small businesses is $1,916 per year or $160 per month to cover a single vehicle. However, the premiums for a commercial auto insurance policy can vary widely and depend on a number of factors. While most small businesses will pay less than $2,000 per vehicle per year, there is a great deal of variance.

Factors that may influence your premium include:

The table below shows the average cost of commercial auto insurance for several common types of business use of commercial vehicles.

Vehicle TypeAverage Cost
Sedan (non-delivery)$1,487
Truck (non-delivery)$1,979
Cargo van$5,115

For many businesses, a minimum of $500,000-$1 million in commercial auto liability is appropriate. To supplement this liability, a commercial umbrella policy may also be appropriate to provide strong protection for your business.

Compare Commercial Auto Insurance Quotes

There are a variety of insurers and brokers in the market, and it may be difficult sorting through all of the coverage options. AdvisorSmith analyzed a variety of commercial auto policies and determined the best commercial auto insurance companies for small businesses. To determine the best commercial auto insurers, AdvisorSmith considered a number of factors, including financial strength ratings from AM Best and Standard & Poor’s, customer satisfaction data from several J.D. Power studies, complaint ratings from the National Association of Insurance Commissioners, available features and options, and availability of information and ease of use of the insurers’ websites.

» Read our full review of the best commercial auto insurance companies.

RankCompanyAdvisorSmith Rating
1Progressive Commercial5.0 / 5.0
2Liberty Mutual4.9 / 5.0
3The Hartford4.7 / 5.0
4Geico4.7 / 5.0
5Auto-Owners4.6 / 5.0
6Travelers4.6 / 5.0
7Erie Insurance4.5 / 5.0
8State Farm4.5 / 5.0
9Allstate4.4 / 5.0
10Cincinnati Financial Group4.4 / 5.0
11Chubb4.4 / 5.0
12Nationwide4.4 / 5.0
13Great American4.2 / 5.0
14Farmers Insurance4.0 / 5.0
15CNA3.8 / 5.0
16Hiscox3.7 / 5.0

Does personal auto insurance cover business errands?

It is common for a business to send its employees out on business errands, such as depositing a check or visiting a client. Most states require minimum liability coverage for all vehicles so your employee may already have liability insurance that covers their vehicle. However, as an employer, you have no control over the level of liability insurance that your employee carries, which in some states could be as low as $30,000-$50,000.

If your employee causes a crash while driving from the office to a worksite and causes serious injury to another driver, the other driver may sue your company. Since your employee was on the job at the time of the crash, your company may be responsible for the injured driver’s medical bills and lost pay due to the crash that exceeds your employee’s personal auto insurance limits.


If you commonly have employees driving on behalf of your business, you should purchase hired and non-owned auto coverage.

Hired and Non-Owned Auto Insurance

Hired and non-owned auto coverage is important for businesses that:

This coverage supplements the existing liability insurance on these vehicles your business does not own. In cases of serious crashes, hired and non-owned auto can cover medical expenses and damage to other vehicles or property caused by the drivers that work for your company or who you have hired.

It’s important to note that hired and non-owned auto insurance does not cover commuting from home to work or any personal errands in vehicles your company does not own.

Final Word

Commercial auto insurance is a critical coverage for any business that makes use of vehicles for business purposes. Whether you own or lease company vehicles, or if you have employees who use personal vehicles for business purposes, it’s important, and often required, to purchase commercial auto coverage. Car accidents are common events, and property damage and personal injuries can result in incredibly costly lawsuits and damages. Obtaining coverage for your business vehicles is a key part of managing your company’s business risks.

Expert Commentary

AdvisorSmith spoke with the following experts to provide critical insight on commercial auto insurance for business owners.

Chigozie Ngwaba

  • Assistant Professor in Residence, Economics
  • Bradley University
Chigozie's Answers

David Russell

  • Co-Director, Center for Risk Management and Insurance
  • California State University, Northridge
David's Answers

Q. What can businesses do to lower their commercial auto insurance premiums?

Q. How should businesses think about balancing risk and affordability when it comes to commercial auto insurance?

Q. How should business owners think about insuring a vehicle for business versus personal use, especially for sole proprietors?

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