Last Updated on August 23, 2020

It’s no secret vehicles are EXPENSIVE. 

They’re a huge investment and oftentimes someone’s pride and joy. Aside from that, they’re also an essential piece of our economy and something countless businesses rely on to perform their work. 

From sole proprietors to landscapers to large-scale delivery businesses, vehicles are the backbone of business operations and may be our only means of transporting ourselves, our employees, and our products from one place to another. 

With that being said, vehicles can also be dangerous and they’re only as safe as the people driving them. So, if you’re wondering how you can protect your business (and your vehicles) in the case of an accident, theft, vandalism, or natural disaster… you’re in the right place. 

In this article, I cover how commercial auto insurance works, what it covers, what it doesn’t cover, how much you can expect to pay for it, and how to get started choosing the right policy for your business. 

So, let’s dive in! 

Quick Reference

An Introduction to Business Vehicle Insurance

Business vehicle insurance is like personal auto insurance for company vehicles but with higher policy limits. This includes trucks, vans, trailers, cars, and any other type of vehicle you or your employees use for your business.

Before we dive deeper, let’s look at a quick example. 

One of your employees rear-ends someone in rush hour traffic on their way back from a job site. It doesn’t matter if your employee is driving their personal vehicle or a company vehicle. The other party can still file a lawsuit against your business and hold it liable for damages. 

If your employee is driving their own vehicle, the other party can come after you for damages or medical expenses beyond the limit of your employee’s personal auto policy coverage. 

On the other hand, if your employee is driving a company vehicle at the time of the accident, your business is responsible for paying damages and any medical payments that occur as a result. Regardless of who owns the vehicle, these expenses can add up fast. 

Without commercial vehicle insurance, you have to pay them out of your own pocket. 

But, a business vehicle insurance policy can help cover medical costs and property damages that occur if your employee is at fault for the vehicle accident. It may also help cover the cost of damages to the insured vehicle as well.

NoteThe specific types of coverage and covered vehicles depend on your policy and specific needs. So, you should always talk with an insurance specialist to find the right vehicle insurance policy for your business. 

How Does Business Vehicle Insurance Protect a Business?

Commercial auto insurance helps cover the financial liability placed on your business in the case of a car accident while doing anything related to your business. This includes activities like:

  • Delivering products from one location to another
  • Driving to a work site or other third-party property
  • Going to a business meeting across town
  • Meeting with a current or potential client
  • Driving employees from one job site to another

Covering your financial liability to third parties is only one piece of the puzzle. Business vehicle insurance can also cover damages or loss of your company vehicles as a result of an accident, theft, fire, or other natural disasters. 

Furthermore, there are three types of vehicles your commercial auto insurance may provide coverage for depending on the type of policy you choose. These different types of coverage include:

  • Only company vehicles you own
  • Only company vehicles you own or lease
  • All vehicles used for business (including personal vehicles)

The third type is most common and recommended for most business owners as it covers you and your employee’s personal vehicles used for business purposes AND company vehicles you own or lease.

With that being said, it’s important to talk to an insurance specialist to understand the types of coverage you need for your business. 

Who Needs Business Vehicle Insurance?

If your business leases or owns company vehicles, you need business vehicle insurance because personal car insurance doesn’t apply in this situation. On the other hand, if you use your personal vehicle for business, you may also want to consider business vehicle insurance. 

But it depends on how your personal vehicle is used and who drives it. If you’re the only person driving your car and go to less than two work-sites a day, your personal car insurance policy may provide enough coverage. 

However, if you have several employees using their own vehicles to do business-related activities, you should consider purchasing a business automobile policy that covers all vehicles used for your business.

This helps protect you and your business if one of your employees is at fault for an accident while performing work-related activities and their personal car insurance policy doesn’t cover all the damages and liability owed. 

Lastly, if your vehicle is on the large or heavy side (i.e. like a semi or tow truck), consider purchasing business vehicle insurance. These vehicles tend to cause more damage so higher policy limits may be required in this situation. 

What Does Business Vehicle Insurance Cover?

There isn’t a one-size-fits-all commercial vehicle insurance policy. Each business needs different types of insurance coverage so it’s important to talk to an insurance carrier about the types of vehicles you want to cover and the types of coverage you need. 

With that being said, most standard business vehicle insurance policies cover:

  1. Liability claims resulting from auto accidents where you (or one of your employees) is an at fault driver
  2. Third-party medical payments that occur as a result of the accident
  3. Physical damages to the insured vehicle caused by theft, a crash, or natural disaster
  4. Damage to the insured vehicle caused by an accident with an uninsured driver
  5. Underinsured motorist coverage if an accident was caused by an underinsured driver. 

The vehicles covered under your commercial auto insurance policy (i.e. company vehicles, personal owned vehicles used for business, or leased vehicles) depend on the type of coverage you choose. 

What Doesn’t Business Vehicle Insurance Cover?

Understanding what business vehicle insurance doesn’t cover is as important as knowing what it does. While each policy is unique, most business vehicle insurance provides higher liability limits to ensure you have sufficient liability coverage so as not to put the business at risk.  Additionally, most personal policies don’t cover things like:

How Much Does Business Vehicle Insurance Cost?

The median cost of business vehicle insurance with a limit of $1 million is $142 per month. Many business owners (44%) can expect to pay less than $1,500 a year. And most business owners (78%) can expect to pay less than $3,000 per year. 

With that being said, your monthly premium depends on a variety of factors and no two business vehicle insurance policies are the same. So, it’s important to talk with a specialist who can help determine what should and shouldn’t be included in your policy. 

How Is it Calculated?

Because there are countless variants between business vehicle insurance policies, your monthly premium will vary depending on a number of factors. Some of these factors include:

  • Who owns the vehicles you want to insure
  • How many people drive these vehicles
  • How often these vehicles are used
  • The overall value of the vehicles you want to cover
  • Your industry (i.e. higher-travel industries should expect to pay more)
  • Coverage limits
  • Which state you’re in

How Do I Get Commercial Auto Insurance?

Whether you own several company vehicles, have employees who use their own vehicles, or are a one-person show using your personal vehicle for your business, business vehicle insurance is something you need to carefully consider. 

And with so many variants, different types of coverage, and commercial insurance providers to choose from, it’s not always easy to know where to start. 

One option is to work with a local insurance agent, while another is to use an insurance company comparison site like CoverWallet, lets you see multiple quotes at once.