Commercial auto insurance: Top providers and coverage options

Young male driver using smart phone while sitting in delivery van.Image: Young male driver using smart phone while sitting in delivery van.

In a Nutshell

If you or your employees regularly drive to client meetings, haul equipment to and from job sites or make deliveries for work, your personal auto insurance policy won't cover you. Commercial auto insurance can help protect business owners and self-employed professionals from accident-related expenses when driving for work.
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Commercial auto insurance can help protect business owners and self-employed professionals, including contractors and freelancers, from a financial loss when driving a business-owned or personal vehicle for work.

If you routinely drive for business, your personal auto insurance policy typically won’t cover you if you’re in an accident. However, commercial auto insurance can help pay for accident-related injuries and property damage whether you or an employee are driving.

Commercial auto insurance provides coverage similar to your personal auto policy. Bundling your commercial and personal auto insurance or other policies may help you save money on coverage.



Who needs commercial auto insurance?

If you occasionally drive your personal vehicle for business reasons, your personal auto insurance policy may cover you if you’re in an accident. But if you or your employees regularly drive for work, personal auto insurance probably won’t cover accident-related injuries and property damage, but commercial auto insurance can.

It helps protect you if you’re a …

  • Business owner with one or more company-owned vehicles
  • Business owner, freelancer or contractor who drives their personal vehicle for business
  • Business owner, freelancer or contractor who drives or whose employees drive hired, rented or leased vehicles
  • Business owner whose employees drive their personal vehicles for work

Whether you or your employees deliver food for a local restaurant, drive to multiple client meetings every week or haul tools and equipment back and forth to job sites each day, commercial auto insurance can help protect you from a financial loss.

If you only use your car to get to and from work each day, you can probably skip the commercial policy — even if you occasionally stop to grab coffee for your coworkers. That’s considered personal driving. But if you drive your coworkers to meetings or other work events, that’s business driving, and your personal auto policy generally won’t cover you if you’re in an accident.

Rideshare insurance

If you drive your vehicle for a ridesharing company like Uber or Lyft, you may need a particular type of coverage, known as rideshare insurance. Your personal auto insurance generally won’t cover you while logged into the app.

Although rideshare companies often provide coverage when you’re logged into the app, the policy limits may not be high enough to cover your expenses if you’re in a serious accident. Plus, if you’re waiting for a fare, coverage may only include third-party injuries and damage — not damage to your vehicle.  

What’s included in a typical commercial auto insurance policy?

A typical commercial auto insurance policy provides many of the same coverages a personal auto insurance policy offers, but commercial policies often have higher limits. In general, when you purchase commercial auto insurance, it includes:

Liability

Liability coverage pays for injuries and property damage you cause to someone else, but it does not pay for your injuries or damage to your vehicle. In some states, it also covers the cost of defending you in a lawsuit if someone sues you after an accident.

When you purchase liability coverage under a personal auto policy, there are typically separate limits for injuries and property damage. Commercial auto insurance often has a combined single limit for bodily injury and property damage claims, resulting in a higher limit and more protection.

Medical payments and personal injury protection

This type of coverage helps pay for your and your passengers’ medical bills after an accident. Availability varies based on where you live.

Collision

Collision insurance helps pay for repairs to your vehicle if you get into a crash while driving for work. For example, if you get into an accident with another vehicle on your way to a client meeting, your insurer will typically pay for the cost to repair your vehicle — up to its current fair market value — minus your car insurance deductible.

Comprehensive

Comprehensive coverage helps pay for physical damage that doesn’t result from an accident, such as severe weather, falling objects, animals, theft and vandalism. So if a tree branch falls on your delivery van, the insurance company will pay to repair it (up to the actual cash value), so you can get back to work.

Uninsured/underinsured motorist

Not all drivers have insurance , even though most states have laws requiring drivers to maintain liability coverage. Uninsured/underinsured motorist coverage can help pay for your injuries and damage to your vehicle if an uninsured driver hits you or the driver’s policy limits are too low to cover your expenses.

Supplemental coverage

In addition to the standard commercial auto policy coverages, some insurers offer add-ons you can include for extra protection. Examples include:

  • Rental reimbursement — Pays for the cost of a rental car while your vehicle is being repaired after a covered event.
  • Gap— Covers the difference between what you owe on your auto loan or lease and what the insurance company will pay if your car is declared a total loss.
  • Roadside assistance/towing — Can help pay for towing, tire changes, lockouts, jumpstarts and fuel delivery if you get stuck on the side of the road.

How much does commercial auto insurance cost?

There’s no easy answer to this question. Your car insurance premium depends on various factors, including the number and type of cars you’re insuring, cost of the vehicle(s), driving history of the drivers, coverage options, deductible amounts, the type of work you do and more.

A bare-bones policy that meets your state’s minimum insurance requirements will typically cost less than a policy with higher limits and a combination of liability and property damage coverage — sometimes known as full coverage. However, it may not provide adequate protection if you’re in a serious accident.

The only way to know how much it will cost is to get a quote. The process is similar to getting pricing for a personal auto insurance policy. You can get a quote online from the insurer, from an insurance company agent or by working with an independent agent. Unlike getting a personal auto policy, you’ll need to provide information about your business to obtain an accurate quote.

Commercial auto insurance providers

Many insurers offer commercial auto insurance, including:

  • Geico
  • Progressive
  • Allstate
  • Nationwide
  • Farmers
  • State Farm
  • Travelers

In addition to the coverages included in a standard commercial auto policy (liability, medical payments, collision, comprehensive and uninsured motorist), some companies also offer add-ons that provide additional coverage.

Common questions about commercial auto insurance

What is hired and non-owned auto insurance?

Hired and non-owned auto insurance provides liability coverage when you or an employee drive for work in a vehicle your business doesn’t own, including hired, rented, leased, borrowed and personal vehicles.

Do I need rideshare insurance?

If you drive for a rideshare service such as Uber or Lyft, your personal auto policy won’t usually cover you while you’re on the clock. The rideshare company’s insurance typically covers you when you’re logged into the company’s app. However, coverage may be limited, and policy limits may not be high enough to cover your expenses if you’re in a serious accident.

Rideshare insurance can provide added protection by filling in the gaps between your personal auto policy and the rideshare company’s insurance.

How is commercial auto insurance different from personal auto insurance?

Personal auto insurance covers you when you’re not driving for work. Commercial auto insurance covers business-owned vehicles, plus hired, rented, borrowed, leased and personal vehicles used for business purposes. So you’re covered if you’re driving to and from client meetings, making deliveries, or dropping off a shipment of client orders at the post office.

What’s next?

If you need to purchase commercial auto insurance, you can start by deciding how much car insurance you need and getting car insurance quotes from multiple insurers. Because insurance companies weigh pricing criteria differently, premiums can vary from insurer to insurer.

Getting a quote is simple. You can typically get one online or over the phone. To get a quote, you’ll need to provide information about your business, the vehicles you want to insure and the drivers. Remember, the coverage and deductible amounts you choose will affect your premium. So it’s crucial to select the same coverage options, and deductible amounts to accurately compare prices between insurers.


About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Towson University. She’s committed… Read more.