Understanding Commercial Auto Insurance By Vehicle Size

Commercial auto insurance is a type of insurance that covers vehicles used for business purposes. It is required by law and provides liability insurance in the event of an accident. The cost of commercial auto insurance varies depending on the number of vehicles, their value, and their business use, among other factors. The average cost for small businesses is $147 per month or $1,762 annually. Commercial auto insurance is necessary for any business that uses vehicles for work-related purposes, such as company cars, food trucks, or delivery vans.

Commercial auto insurance requirements by state

Commercial auto insurance requirements vary by state, and it's important to understand the specific regulations for your state. Here is a breakdown of the commercial auto insurance requirements for a few states:

Alabama

The minimum liability coverage for commercial auto policies in Alabama is 25/50/25. If your business involves transporting passengers, the insurance requirements vary based on the number of passengers:

• 1-5 passengers: 25/50/10
• 6-20 passengers: 50/200/30
• 21 or more passengers: 100/500/50

For non-hazardous property carriers, the liability coverage requirement is 100/300/50.

Alaska

Alaska mandates a minimum liability limit of 50/100/25 for commercial auto policies. Passenger-carrying vehicles need to have bodily injury coverage of $500,000 and property damage coverage of $200,000. Property carriers are required to have $500,000 in bodily injury coverage and $200,000 in property damage coverage.

Arizona

In Arizona, the minimum liability limit for commercial auto policies is set at 25/50/15. The insurance requirements for passenger-carrying vehicles depend on the number of passengers:

• 1-8 passengers: $250,000 CSL; UM $250,000
• 9-15 passengers: $750,000 CSL; UM $300,000
• 16 or more passengers: $5 million CSL; UM $300,000

For vehicles transporting property or non-hazardous materials, the requirements vary based on weight:

• 20,001-26,000 lbs.: $300,000 CSL
• More than 26,000 lbs.: $750,000 CSL

If hazardous materials are being transported, a higher CSL is required, ranging from $1 million to $5 million depending on the substance.

Arkansas

Arkansas's commercial auto policy minimum liability limit is 25/50/25. The insurance requirements for passenger transportation services vary based on the number of passengers:

• 1-12 passengers: 50/80/30
• 13-20 passengers: 50/120/30
• 21-30 passengers: 50/160/30
• 31 or more passengers: 50/200/30

For vehicles carrying property and non-hazardous goods, the minimum liability coverage is 50/100/30. The requirements for hazardous material transport range from $1 million to $5 million depending on the specifics.

California

California mandates a minimum liability limit of 15/30/5 for commercial auto policies. Passenger-carrying transport operators have different insurance requirements based on the number of passengers:

• 1-7 passengers: $750,000 CSL
• 8-15 passengers: $1.5 million CSL
• 16 or more passengers: $5 million CSL

Businesses transporting property or non-hazardous goods have varying requirements based on weight and type of goods. Household goods carriers, for example, need $600,000 CSL or 250/500/100 in liability coverage.

These are just a few examples of the commercial auto insurance requirements in different states. Each state has its own set of regulations, and it's essential to understand the specific rules for your state to ensure compliance and adequate coverage.

What is covered under commercial auto insurance?

Commercial auto insurance provides coverage for cars, trucks, vans, and other vehicles used by businesses. It is designed for commercial vehicles, which are often excluded from personal auto insurance policies. Commercial auto insurance policies are typically more expensive than personal auto insurance policies due to the higher coverage limits needed to account for the increased risks associated with commercial vehicles, such as their size, the amount of damage they can cause in an accident, and the value of their cargo.

There are three basic parts to a commercial auto insurance policy: physical damage insurance, liability insurance, and other coverage types. Physical damage insurance includes collision and comprehensive coverage, which protect against vehicle theft, vandalism, and physical damage caused by collisions or non-collision incidents like fires, weather events, or impact with animals. Liability insurance covers bodily injury, property damage, and uninsured or underinsured motorist claims. It pays for medical costs, lost wages, and legal expenses if a lawsuit is brought against the policyholder due to an accident. The third part, other coverage, includes medical payments, towing and labour, rental reimbursement, and auto loan or lease gap coverage.

Commercial auto insurance policies can be customized to include additional coverages, such as new vehicle replacement cost coverage, hired auto physical damage with loss of use coverage, and roadside assistance. These policies can also extend beyond company-owned vehicles to cover employees driving their own vehicles for business purposes.

Overall, commercial auto insurance provides financial protection for businesses by covering legal bills, medical expenses, and property damage resulting from accidents involving company vehicles. It is an important form of insurance for small businesses, independent contractors, and specific professions that frequently use vehicles for work, such as construction, delivery, and transportation of passengers.

How much does commercial auto insurance cost?

The cost of commercial auto insurance varies depending on several factors, and each business is unique in terms of its requirements and risks. The average cost of commercial auto insurance is $147 per month, or $1,762 annually, for small businesses. However, 37% of small business customers pay less than $100 per month for their policies. The cost of commercial auto insurance can be as little as $12.50 per month or $150 per year for certain low-risk professions.

The cost of commercial auto insurance is influenced by the following factors:

• The type of work and industry. For example, a roofing contractor will pay more than a mortgage broker due to the increased driving and risks associated with the profession.
• The number of vehicles. A business with a fleet of three cars will pay more than a business with just one.
• The make, model, and year of the vehicles.
• The driving history of employees. A safe driving record can reduce costs.
• The number of miles driven.
• The state where the business operates. Location impacts the cost due to factors such as crime rates and natural disaster risks.
• The business's claims history. Fewer claims in the past will result in lower costs.
• The level of coverage. Higher coverage limits will increase the premium.
• The type of vehicle. Larger vehicles, such as trucks, will cost more to insure than standard cars.
• The driving distance. Longer distances and interstate trips will increase the premium.
• The parking location. Areas with high vandalism and auto theft rates will result in higher costs.
• The deductible. A higher deductible will reduce the premium.
• The type of cargo. Hauling hazardous materials or high-value items will increase the cost.
• Credit history. A poor credit history can increase the cost of commercial auto insurance.

Some specific examples of commercial auto insurance costs include:

• Standard car used for business purposes: $600 to $2,400 per year.
• Limousine: $4,000 to $10,000 per year.
• Cargo or delivery van: $3,300 to $6,200 per year.
• Taxi: $5,000 to $10,000 per year.
• Semi-truck: $8,000 to $12,500 per year for an owner-operator.
• Contractor's commercial auto insurance: $257 per month on average.
• For-hire transport trucks: $767 to $1,041 per month on average.

It is important to note that these are averages, and the cost of commercial auto insurance can vary significantly depending on the specific circumstances of a business.

How to get commercial auto insurance quotes

Commercial auto insurance is a type of insurance policy that covers vehicles used for business purposes, including cars, trucks, and vans. It is designed for vehicles used by or for a business and can include vehicles bought for a business and personal vehicles used for work purposes.

Commercial auto insurance covers vehicle damage, driver injuries, legal bills, medical expenses, and property damage in the event of an accident. It also provides coverage for collisions, comprehensive damage, medical payments, and uninsured or underinsured motorists.

• Identify your needs: Determine the type of coverage you require, such as liability and collision coverage, as well as any add-ons like rental vehicle reimbursement or roadside assistance. Consider the number and type of vehicles you need to insure and the level of protection you need.
• Gather information: Before reaching out for quotes, ensure you have the necessary information readily available. This includes basic driver information, such as names and driving history, and basic business information, such as the business name, location, and type. You will also need to provide details about the vehicles, including their make, model, location, and intended use. Additionally, be prepared to provide information about your current personal auto coverage, the desired coverage level, and the approximate value of any tools or equipment transported in the vehicles.
• Contact insurance providers: You can obtain commercial auto insurance quotes by either shopping online or speaking directly to an agent. Reach out to multiple providers to get a range of quotes and find the best option for your business. Some top commercial auto insurance providers include Travelers, State Farm, Erie Insurance, GEICO, and Progressive.
• Compare quotes: Once you have received quotes from different insurance companies, carefully compare the coverage options, limits, and prices. Consider not only the cost but also the reputation of the insurance company, their customer service, and the ease of managing your policy.
• Finalize the policy: After selecting the most suitable quote, work with the insurance provider to finalize the details and ensure that all your requirements are met.

By following these steps, you can obtain commercial auto insurance quotes and choose the best policy to protect your business and its vehicles.

What types of vehicles are covered?

Commercial auto insurance covers a wide range of vehicles used for business purposes. This includes company cars, food trucks, delivery vans, dump trucks, box trucks, and commercial trucks and vans. It also covers personal vehicles used for business purposes, such as making deliveries or transporting clients.

Commercial auto insurance is necessary for vehicles used for work because personal car insurance typically won't cover accidents that occur while driving for business.

The specific types of vehicles covered and the requirements for insurance coverage vary by state. For example, in Alabama, the minimum liability coverage for commercial auto policies is 25/50/25, while in Alaska, it is 50/100/25.

The size of the vehicle may also impact the insurance requirements. For instance, in Alabama, passenger vehicles have different requirements than freight and cargo vehicles.

Additionally, there may be stricter requirements for transporting hazardous materials. For example, in Arizona, vehicles transporting hazardous materials are required to have insurance with a $1 million CSL or a $5 million CSL, depending on the substance.

Frequently asked questions