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. Commercial auto insurance is an important coverage for businesses that use vehicles for business purposes, including personally owned vehicles that are frequently used for business purposes. This insurance can provide financial and liability protection for a business in the event that a vehicle being used for business is involved in a crash.
Commercial auto insurance provides coverage for vehicles owned or titled in the name of a business. It also provides coverage for vehicles that are personally owned, but used frequently for business purposes, as many personal insurance policies do not provide coverage for a vehicle when it is being used for certain business purposes. The key coverage for commercial auto insurance is liability protection, which protects a business in the event that a vehicle owned or being used by the business is at fault for a crash that causes bodily injury or property damage. Additionally, commercial auto insurance can provide protection for the value of a vehicle in the event it is damaged.
Commercial auto insurance premiums are usually higher than personal auto insurance premiums. Like personal auto insurance, the cost of commercial auto insurance is influenced by the driving record of the drivers using the auto, along with the type and location of the vehicle. However, the cost of commercial auto insurance premiums is most influenced by the commercial use of a vehicle, and different types of companies using the same vehicle will face drastically different premiums. For example, a vehicle being used for ridesharing trips will generally have higher premiums than the same vehicle being used by a salesperson to visit local clients.
Average Cost of Commercial Auto Insurance by Type of Vehicle
The table below shows the average cost of commercial auto insurance for several common types of business use of commercial vehicles. Note that costs can vary widely depending upon the location of the business, the type of business, the number of miles driven, and many other factors explored below.
|Vehicle Type||Average Cost|
What does commercial auto insurance cover?
Commercial auto insurance generally includes coverages that are similar to personal auto insurance. These coverages include liability, collision, and comprehensive. Liability coverage provides financial protection in the event of a crash where a third party experiences bodily injury or property damage. Collision coverage protects the value of the vehicle if it is damaged or destroyed in a crash. Comprehensive coverage protects the value of the vehicle if it is stolen, damaged, or destroyed while not in motion, such as by a falling tree or an auto thief.
Endorsements or additional coverages are also available for commercial auto policies, including:
- Loading and unloading liability, which covers a business for damage caused while loading or unloading goods or objects from a covered vehicle.
- Equipment and supplies coverage, which can cover equipment or other valuable property that is damaged in a crash.
Companies in which employees use their personal vehicles for business purposes can purchase hired and non-owned auto liability, which provides additional liability coverage on top of employees’ personal automobile liability coverage. This can protect your business from the financial impact of severe crashes where your employee’s coverage is not sufficient to cover the costs.
Who needs a commercial auto insurance policy?
If a vehicle is owned or titled in the name of the business, these vehicles would need a commercial auto insurance policy in order to be adequately covered. Additionally, vehicles that are personally owned but used for certain business purposes may also require a commercial auto insurance policy. This applies to vehicles owned by the company’s owner as well as vehicles owned by your employees that they use for business purposes. For example, using a personal vehicle for carrying passengers or deliveries is frequently excluded from personal auto insurance policies and requires commercial auto insurance.
Additionally, even if an employee carries personal auto insurance, their limits of liability may not be sufficient if they are involved in a crash while driving for business, including something as simple as driving to the store for office supplies. The other party may seek to recover damages from the driver’s employer, as the company may have more financial resources to pay for damages than the employee’s personal liability policy. Therefore, commercial auto insurance is important for covering such situations.
For certain types of vehicles, which are designed primarily for business use, commercial auto insurance is the only type of auto insurance coverage available. This includes large vehicles such as box trucks, tow trucks, garbage trucks, flatbeds, and semi-trucks.
What determines the cost of commercial auto insurance?
Numerous factors influence the cost of commercial auto coverage. Some of the most important factors include:
- Type of business and the use of the vehicle: A salesperson will generally have lower premiums than a delivery driver.
- Type of auto: Large and specialty vehicles such as box trucks have higher premiums compared with small vehicles such as sedans.
- Types of coverage: In addition to the core coverages of liability, collision, and comprehensive, other coverages are available and add to the premium costs.
- Amount of coverage: Many small businesses commonly choose $1 million in liability coverage, but each business has different risk profiles. The higher the coverage, the higher the premiums will generally be.
- Claims history: Businesses with a history of claims will pay higher premiums.
- Miles driven: The more miles that are driven, the higher the premium will be.
- Parking location: The location of the business will influence the premium based upon the number of crashes in that area as well as the prevalence of car theft, vandalism, and natural disasters.
- Type of cargo: Companies carrying hazardous goods may pay higher insurance premiums to account for the added risk.
- Credit history: Businesses with good credit histories will pay lower premiums.
- Driving history of drivers: Businesses that hire drivers with clean driving records will pay lower premiums for their commercial auto insurance.
To determine the average cost of commercial auto insurance, AdvisorSmith examined rate quote estimates for commercial auto insurance from a variety of insurers around the nation. Our rate quotes considered the cost to insure a single vehicle with a single driver with a good driving record being used for commercial purposes. The rate quotes we used assumed a 38-year-old driver driving a 6-year old sedan in a variety of different types of businesses. Additionally, we also examined quotes for commercial auto insurance costs for other types of vehicles, such as vans or trucks. The premiums in our study included coverage for $1 million of liability insurance, along with collision and comprehensive coverage for the vehicle itself.