Commercial Auto Insurance Cost
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Commercial Auto Insurance Cost

Last Updated on December 27, 2023
Written by CPA Alec Pow | Content Reviewed by Certified CFA CFA Alexander Popinker

Nowadays, car insurance is an important part of our daily life. This type of insurance provides coverage for loss or damage to any vehicle such as a car, two-wheeler, commercial vehicle, etc.

How much does Commercial Auto Insurance cost?

There are several factors that will affect the cost of a commercial auto policy, such as the type of insured vehicle, the liability limits you choose, different coverages you select to buy, and the motor vehicle reports of the drivers being listed. In general, a restaurant will need just one or two cargo vans for delivering food and picking up supplies. The average cost of commercial auto insurance would be anywhere between $950 and $1,300.

Here are some examples so you can get a better idea about how much you should budget for this insurance:

Typical limits, coverage, and prices for a driver with a clean driving record:

  • Liability: $1 million
  • Collision Coverage: $500 deductible
  • Comprehensive Coverage: $500 deductible

Average cost per insured vehicle: $800 to $1,300 per year.

Factors that will increase the cost:

  • The request for a speedy delivery
  • Motor vehicle reports with accidents or tickets in the last three years;
  • The usual area of operation
  • Cars with more than ten thousand pounds of gross vehicle weight

Prices for extra coverage added by endorsement:

  1. Rental reimbursement: $120 per year
  2. Hired and non-owned auto liability: $60 per year
  3. Roadside assistance: $60 per vehicle per year
  4. Hired auto physical damage ($100 deductible): $180 per year

Commercial Auto Insurance Overview

Commercial auto insurance is similar to personal auto insurance and includes physical damage coverage and liability coverage. Though, it is different from the personal auto policy due to different reasons which are important to the business use of a car:

  • Different endorsements are available to improve and increase the values of coverage.
  • A large variety of vehicles can be covered.
  • The majority of insurance companies do not have a certain or limited number of drivers on the policy.
  • Higher liability limits are available.
  • The majority of the insurance companies do not have a certain or limited number of cars covered on the policy.

You might also like our articles on the cost of small business insurance, SR22 insurance, or personal car insurance.

Commercial auto insurance has the great advantage of covering the vehicles that are used and are not owned by the company or the employees. By choosing this endorsement, your business use of vehicles owned by employees or rented vehicles can be covered with the same liability limits which are on the cars you own. This results in better protection for your company.

What does Commercial Auto Insurance cover?

Taken as a package policy, commercial auto insurance provides coverage on a third- and first-party basis:

Roadside assistance: This policy reimburses the company for costs when an insured car needs assistance like towing, lockout, breakdown, fuel, or other assistance required to get the car back in service.

Bodily injury liability: In case an insured driver is involved in an at-fault accident, this coverage offers financial protection for your business. If your business is found liable, the coverage will pay for lost wages, funeral costs, and medical costs for a third party. Also, it will pay for any associated defense expenses.

Comprehensive coverage: It covers the costs of replacing or repairing an insured car if broken by events other than a collision, like windshield damage, vandalism, or hail damage. Also, it will pay to replace the car if unrecovered or stolen. If chosen, comprehensive claims are subject to a deductible.

Property damage liability: In case an insured driver is found liable for an at-fault accident, this coverage will pay to replace or repair the car or other property. Taking into consideration the fact that two vehicles are not involved in all accidents, it is important to cover higher limits of liability an insured driver can be found at fault for producing a multi-vehicle accident or great damage to property.

Collision coverage: This policy covers the costs of repairing or replacing an insured car in case of an accident, subject to the deductible listed on the policy.

Underinsured/uninsured motorist coverage (UM): This policy covers the expenses in case an insured driver (or an insured car in some states) is injured by another motorist, who is not insured or does not carry enough insurance to cover the medical costs of the injured driver. There are some states where this coverage can also be applied to property damage provoked by an underinsured or uninsured driver. Also, this coverage pays for suffering and pain, which typically is not covered under the Bodily injury policy.

Medical payments: This coverage is very valuable as it pays for the medical expenses of an insured driver and passenger if injured in an accident regardless of who is at fault.

What Optional Coverages are Available?

Many optional coverages are available and can be added to the policy by endorsement. Through these endorsements, the business is able to customize its policy according to its individual needs and industry.

Hired auto physical damage: with this endorsement, the business is allowed to offer physical damage coverage on cars rented for business use and is subject to the deductibles chosen.

Hired and non-owned liability: offers liability coverage when an employee uses his own car for business-related activities or on cars rented by the business.

Is Commercial Auto Insurance Required By Law?

Commercial Type VehiclesThere are general laws requiring commercial auto insurance under different circumstances, depending on the state where your business vehicle is registered. This is required because personal auto policies do not provide liability limits required by the state agency.

Cargo vehicles: most states require commercial auto insurance for any vehicle which transports cargo, like box truck, semi-truck, or cargo van, regardless of the weight or size.

The weight of the vehicle: commercial insurance policy is required in most states for vehicles over 1 ton in gross vehicle weight.

Transportation vehicles: commercial auto insurance is required for any vehicle used to transport people for a fee, like buses, limousines, or taxi cabs.

Type of vehicle: commercial auto policy is required in most states for utility-style vehicles, like dump trucks, vans, trucks, or other specialty utility vehicles.

Also, it is very important to mention that even though your state might not require commercial insurance for the cars your business uses, a personal auto policy will not offer coverage for different uses like pizza delivery.

Will Commercial Auto Insurance Cover a Vehicle Used for Personal Business?

If coverage is required and the right disclosure is made on the application, the majority of insurance companies will allow an owner or employee to use an insured car for personal use. In general, you will have to pay another $60 per year for getting coverage for regular personal use. Almost every time, the insurance carrier will ask for every person with access to a business car to be listed as a driver on the insurance.

Alec Pow
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