Commercial Auto Insurance: A Multi-Billion Dollar Industry

The commercial auto insurance industry in the US is worth billions of dollars. Commercial auto insurance is a critical component of the economy, protecting businesses from financial ruin in the event of disasters or lawsuits. It covers vehicles used for commercial or business purposes, including company cars, food trucks, and delivery vans. While the cost of commercial auto insurance varies depending on factors such as the type of vehicle, business, and location, it is generally more expensive than personal auto insurance due to the higher risks involved in driving for work.

The average cost of commercial auto insurance

The cost of commercial auto insurance varies depending on a range of factors. Small businesses pay an average premium of $147 per month or $1,762 annually. However, 37% of small businesses pay less than $100 per month, and 26% pay between $100 and $200 per month. The national average monthly cost for commercial auto insurance ranges from $257 for contractor autos to $1,041 for for-hire transport trucks.

The cost of commercial auto insurance is determined by several factors, including the type of vehicle, coverage needs, claims history, driving history, profession, and location. The number of vehicles a business owns and their value also impact the cost, with more vehicles and higher-value vehicles typically resulting in higher premiums.

Businesses that require their employees to drive frequently, such as those that need to drive to various work sites, factories, or stores, will generally pay more for commercial auto insurance. The type of work being done also plays a role, with jobs that involve driving to job sites and carrying equipment tending to have higher insurance costs.

Additionally, businesses located in more populated areas may pay higher premiums due to higher property prices and crime rates. The state in which the business operates also affects the cost, as different states have varying coverage requirements.

It's important to note that commercial auto insurance is typically more expensive than personal auto insurance due to the higher risk associated with business use. Commercial vehicles are generally considered to have a higher risk of damage and tend to have higher values, leading to increased premiums.

The best commercial auto insurance companies

The US commercial auto insurance industry is worth billions of dollars, and there are many providers to choose from. Here is a list of some of the best commercial auto insurance companies:

Progressive

Available in all 50 US states, Progressive offers affordable coverage for a variety of vehicles and business situations. They also offer nine discounts to help business owners save, including a 15% discount for paying the full premium upfront. Progressive is one of the nation's largest commercial auto insurers by written premiums and is a good choice for those looking to bundle and save, as they also offer business owners policies, professional liability, and other essential coverages.

Geico

With over 70 years of experience, Geico is a top choice for personal and commercial auto insurance. They offer coverage for a range of vehicles, from cars to semi-trucks, and make it easy to manage your policy online. Geico also provides general liability, professional liability, and workers' compensation coverage, along with Business Owner's Policies.

NEXT

NEXT is a newer company that offers completely online quotes and coverage in a matter of minutes. They cater to small businesses, with tailored policies and cheap pricing for businesses with few employees. NEXT covers up to 10 vehicles and 15 drivers and offers standard coverages such as medical expenses, property damage, underinsured motorists, collisions, rental reimbursement, and towing.

Sentry

Sentry has been in business since 1904 and specializes in working with industries such as construction, dealerships, retail, and trucking. They offer 24/7 online claims filing and provide access to an expert safety consultant to help craft a fleet safety program.

Acuity

Acuity has low complaint levels and offers supplemental coverage types such as bail bond payments, temporary substitute vehicles, and fire department service charges. They provide coverage for a range of businesses, including construction, manufacturing, trucking, and retail.

Auto-Owners Insurance

Auto-Owners Insurance has a very low level of complaints and offers various ways to save, including discounts for paying in full, buying multiple policies, and using a telematics program to monitor your fleet. They also include road trouble service and coverage for additional expenses like rental cars and food and lodging if you can't drive your work vehicle due to an accident.

The Hartford

The Hartford offers commercial auto insurance for both small and large businesses and can cover lost business income if your business vehicle is in a crash. They also provide gap coverage for leased and loaned vehicles and coverage for electronic devices. If you replace a totaled work vehicle with an electric, hybrid, or natural gas vehicle, they will pay an additional 10% (up to $2,500) of your coverage limit.

Nationwide

Nationwide is a large insurance company that offers commercial auto insurance for various industries, including commercial agribusiness, construction, and manufacturing. They provide online business insurance quotes, claims filing, and a repair shop locator. Their Vantage 360 Fleet program allows you to monitor your drivers' locations and driving behaviour and offers a rewards program for safe driving.

The factors influencing the cost of commercial auto insurance

The cost of commercial auto insurance is influenced by a variety of factors, and these can be broadly categorised into factors relating to the business and factors relating to the vehicle.

Business Factors

The type of business is a key consideration for insurers when determining the cost of commercial auto insurance. Businesses that require their vehicles to be driven long distances or during peak traffic hours will pay more for their insurance, as these vehicles are considered a higher risk. The industry the business operates in will also impact the cost, as some industries are considered more risky than others. For example, contractors and landscapers often pay higher premiums than businesses that primarily use cars for food delivery. The number of vehicles a business owns, rents, or leases, and whether employees use their personal vehicles for work purposes, will also influence the cost of commercial auto insurance.

Vehicle Factors

The type and size of the vehicle are important factors in determining the cost of insurance. Larger and more expensive vehicles will cost more to insure due to their higher value and the potential for greater damage in an accident. The age and condition of the vehicle are also taken into account, with newer and more reliable vehicles often resulting in lower premiums. The load the vehicle will routinely carry is another consideration, as this can increase the risk of accidents and the potential for damage.

Other Factors

In addition to the business and vehicle factors outlined above, there are several other factors that can influence the cost of commercial auto insurance. These include the driving records of the employees who will be operating the vehicles, the location of the business, the coverage limits and deductibles selected, and the credit history of the business.

It is worth noting that the specific factors and their relative importance can vary between insurance providers, and it is always a good idea to shop around and get multiple quotes to find the best deal.

The difference between commercial and personal auto insurance

The US commercial auto insurance industry is worth a lot, with business owners paying at least $2,000 per year for full-coverage commercial auto insurance. But what is the difference between commercial and personal auto insurance?

Well, the main difference is in how the vehicle is used. If a vehicle is used for business purposes, it will probably need to be insured with a commercial auto insurance policy. So, if you're a florist who uses their truck to run errands, commute to work, and occasionally for work errands, you could be covered under a personal auto insurance policy. However, if that same truck was being used to transport flowers to clients, it would need to be covered by a commercial auto insurance policy.

Another factor is ownership. If a business owns the vehicle, it will most likely need to be insured by a commercial auto insurance policy. If you're a sole proprietor, you might only need a personal auto insurance policy. Similarly, if the vehicle is titled in the name of an individual, it might not need commercial insurance.

The type of vehicle is also important. If the vehicle is heavier than a normal-sized pickup or SUV, like a dump truck or semi-truck, it will likely require a commercial auto insurance policy. This is because heavier vehicles can cause more damage if they're involved in an accident and may need special insurance coverages.

Liability limits are another consideration. Commercial auto insurance policies typically offer higher liability limits than personal auto insurance policies. If your business requires higher liability limits, you will probably need a commercial auto insurance policy.

Finally, personal auto insurance policies usually provide broader coverage to family members in more circumstances. A commercial auto insurance policy may only cover family members when they are driving or occupying the insured auto.

The types of vehicles covered under commercial auto insurance

Commercial auto insurance covers a wide range of vehicles used for business purposes. This includes company cars, commercial trucks, vans, box trucks, and food trucks. It is important to note that personal car insurance does not cover accidents that occur while driving for business purposes.

Commercial auto insurance policies typically offer higher liability limits than personal auto insurance policies. They provide coverage for bodily injury liability, property damage liability, personal injury protection, medical payments, collision coverage, and comprehensive coverage, among other things.

Commercial Trucks and Vans

Commercial trucks and vans are commonly used for transporting goods, equipment, or people. This includes delivery vans, fleets of vehicles, and even personal cars used for business purposes.

Trailers

Trailers may be automatically covered by commercial auto insurance if they fall under a certain weight limit, such as 3,000 pounds of gross vehicle weight. However, if you want coverage for accidents, theft, or other issues, you will likely need to list your trailer on your policy, regardless of its weight.

SUVs, Jeeps, Tractors, and Construction Vehicles

Bigger and heavier commercial vehicles, such as SUVs, Jeeps, tractors, trailers, and construction vehicles, often require commercial auto insurance due to the potential for more significant damage in an accident.

Ride-Share Vehicles

If you drive for a ride-sharing company like Uber or Lyft, you may need additional commercial auto insurance coverage. Check with your insurance company to see if your personal policy allows for ride-sharing, as some companies now offer commercial insurance coverage for their drivers.

In summary, commercial auto insurance covers a diverse range of vehicles, from cars to trucks to specialty vehicles, all of which are used for business purposes. It is essential to understand the specific requirements and coverage options to ensure adequate protection for your business and employees.

Frequently asked questions