Commercial Auto Insurance – What It Is & What It Covers

Do you use your vehicle for commercial purposes? If yes, then getting a commercial auto insurance policy is a great idea.

Commercial Auto Insurance - What It Is & What It Covers

Commercial auto insurance covers physical damage and liability in scenarios not covered by personal auto policies, offering comprehensive protection for businesses.

However, it covers a range of commercial vehicles, including company cars and trucks used for business, providing specific protection for businesses.

Additionally, commercial auto insurance is vital for businesses, ensuring protection for the cars, trucks, and vans used in their operations.

Regardless of fleet size, businesses must secure proper coverage with this insurance type, ensuring protection for operations on any scale.

What Is Commercial Auto Insurance?

Commercial auto insurance is a specialized form of vehicle insurance tailored for those using their vehicles for business-related activities.

The insurance agreement outlines terms for compensation by your provider for financial losses due to covered incidents like accidents.

Vehicles eligible for coverage under this type of insurance encompass a range of business-related automobiles, including company cars, commercial trucks, and vans.

In addition, it extends to unique vehicles like box trucks and food trucks, ensuring a comprehensive scope of coverage.

However, it’s essential to note that standard personal car insurance does not cover claims if an accident occurs while driving for business purposes.

The necessity for commercial auto insurance arises to address this gap in coverage for business-related vehicle use.

How Does Commercial Auto Insurance Work?

Commercial auto insurance, akin to personal car insurance, covers work vehicles such as delivery vans, trucks, and company cars.

However, if you or an employee cause an accident with a work vehicle, the policy compensates for injuries and property damage to others.

Furthermore, this insurance type extends coverage to repair or replace your work vehicle. This additional protection can be obtained through various coverage types, including collision and comprehensive insurance.

In essence, it ensures that the financial aspects of accidents, damages, and replacements related to your business vehicles are adequately addressed.

Types Of Coverage Under Commercial Auto Insurance

Like personal auto insurance, this insurance type offers similar coverage, encompassing liability, collision, comprehensive, medical payments, and uninsured motorist coverage.

However, these components are tailored to provide comprehensive protection for both personal and business-related driving situations.

Despite the similarities, there are distinctions between this policy and a personal auto policy. These differences include eligibility criteria, definitions of terms, coverage specifics, exclusions, and limits.

Understanding these distinctions is essential for aligning insurance with the unique needs and risks associated with commercial vehicle use.

Bodily Injury Liability Insurance

This type of coverage covers the costs associated with injuries or fatalities caused by you or an employee. However, it also covers your legal expenses in the event of a liability claim resulting from the incident.

Property Damage Liability Insurance

It offers protection if your vehicle unintentionally damages someone else’s property. This includes coverage for legal defense costs in such situations.

Combined Single Limit

A combined single limit consolidates both bodily injury and property damage claims against you into a single overall limit, rather than having separate limits for each.

Personal Injury Coverage

This covers the medical expenses of both the driver and passengers in your vehicle resulting from a covered accident, regardless of fault.

Medical Payment (MedPay) Coverage

Covers medical expenses and additional costs, including funeral fees, for both you and your passengers, irrespective of who caused the accident.

However, it is important to note that Medpay does not extend to cover lost wages and is typically available in smaller amounts ranging between $1000 and $5000.

Comprehensive Insurance

Comprehensive insurance addresses the expenses associated with repairing or replacing your vehicle in case of theft, vandalism, flood, fire, and other incidents outlined in the policy.

Uninsured Motorist Coverage

This type of coverage covers injuries to you and your passengers if you are involved in an accident with an uninsured driver.

In some states, you can opt for uninsured motorist coverage, which covers damage to your vehicle caused by an uninsured driver.

Underinsured Motorist Coverage

An underinsured motorist helps with your medical costs. For instance, if you’re involved in an accident with a driver who doesn’t have enough insurance coverage, it helps to cover your medical expenses.

What Isn’t Covered By Commercial Auto Insurance?

Commercial vehicle insurance aims to shield businesses from financial setbacks in the event of accidents involving company vehicles.

However, there are specific exclusions in commercial vehicle insurance. Here are some instances that are not covered by this insurance policy.

Personal Vehicles Used For Work

If you employ your vehicle for work-related activities, it won’t be protected by commercial vehicle insurance.

Additionally, you must obtain a distinct policy to ensure coverage for your vehicle.

Rental Vehicles Used For Work

When renting a vehicle for work-related tasks, commercial vehicle insurance won’t extend coverage. To safeguard the rental vehicle, acquiring a separate policy is necessary.

Unattached Tools

The equipment housed in a commercial truck or van may lack coverage under a commercial vehicle insurance policy.

However, protection against theft and damage can be secured through a commercial property insurance policy.

Therefore, it’s crucial to recognize that the specifics of commercial vehicle insurance policies can differ based on the provider and the particular policy in place.

How Much Does Commercial Auto Insurance Cost?

The costs of commercial auto insurance depend on factors like the number of vehicles, their value, and how they’re used for business.

Small businesses can expect an estimated monthly cost of around $147 for this insurance. The median reported monthly cost is $142, but actual expenses can vary widely depending on the specific policy and provider.

The Bravo Policy indicates that the average annual cost for commercial auto insurance, with a maximum coverage of $1 million, is $2,100. About 45% of small businesses budget less than $1,700 per year for their policy.

Who Is Covered By Commercial Auto Insurance?

This insurance covers you and licensed employees driving company vehicles, provided they are listed on the policy.

However, it is essential to include any employee regularly operating commercial vehicles by adding them to the commercial vehicle insurance policy.

How To Get

Secure Adequate Coverage

It’s crucial to have sufficient commercial auto insurance to safeguard your assets in case of a lawsuit following an accident.

Consider obtaining liability coverage that exceeds the minimum requirements set by your state. Nationwide suggests a minimum of $500,000 in liability coverage per vehicle.

Engage With An Insurance Agent

Seek the assistance of an insurance agent without hesitation. An agent can assist you in pinpointing the most suitable policy for your business. Then tailor it to include the specific commercial auto coverage relevant to the nature of your work.

Uninsured/Underinsured Motorists Coverage

This type of coverage takes care of medical expenses for you and your passengers in the event of an accident with someone lacking liability insurance or carrying insufficient liability coverage.

Research On The Insurance Company

Dedicate time to scrutinize the insurance company you are considering for your commercial auto insurance.

Avoid relying solely on price; instead, compare the coverage provided and review feedback from multiple companies.


Businesses must prioritize commercial auto insurance to shield themselves from unforeseen costs arising from accidents involving either the business owner or employees.

Whether the vehicle plays a crucial role in daily operations or is sporadically utilized for work-related purposes, It is imperative to secure a tailored auto insurance policy that aligns with the unique needs of the business.

Frequently Asked Questions

Does Commercial Auto Insurance Cover My Vehicle?

Yes, commercial auto insurance can cover your vehicle, and it will be protected when driven for personal use or work.

Can I Buy Commercial Auto Insurance By Itself?

Yes, you can purchase commercial auto insurance by itself along with liability insurance. This is to safeguard your business from unseen losses in the future.

Previous articleGKS Scholarship – What It Is & How To Apply
Next articleHealth Insurance: Meaning And How It Works