What Types of Businesses Need Commercial Car Insurance?

Businesses that need commercial auto insurance can include contractors, real estate agents, transportation services and any enterprise where driving for business purposes is part of its daily operations. This essential coverage protects business vehicles in the event of an accident and with the right coverage, can insure equipment and inventory inside the vehicle.

Learn about the different commercial auto insurance coverages, along with how you can get the right insurance for your business.

Does My Business Need Commercial Auto Insurance?

Commercial vehicle insurance is essential when a vehicle is used primarily for business purposes such as transporting goods, business equipment or passengers for a fee, like in delivery services or taxi operations. If your business uses a truck or a fleet of trucks, then you should look into commercial truck insurance.

What Types of Commercial Auto Policies Are There?

Navigating through the array of auto insurance coverages for your business can be complex, so we’ve broken down the common insurance types available for your commercial vehicle:

• Liability coverage: If you're at fault in an accident, this coverage helps pay for injuries to others and damages to their property. It also covers legal expenses if you face a lawsuit.
• Collision coverage: This is essential for covering damages from accidents to your business vehicles, providing protection when another vehicle collides with your car or truck.
• Comprehensive coverage: This protects you against non-collision incidents, such as damages from theft, weather events, vandalism or fire.
• Rental reimbursement: This coverage steps in after an accident to cover the cost of a rental vehicle while your business vehicle is being repaired.
• Uninsured/underinsured motorist coverage: This covers injuries or damages incurred by your business vehicle occupants when the other driver is responsible for causing an accident but does not have insurance or enough coverage to cover your losses in full.
• Personal injury protection (PIP): Regardless of who's at fault, PIP pays for medical expenses and lost income due to injuries sustained by occupants of your business vehicles in an accident.
• Medical payments coverage: This pays for medical or funeral expenses related to accident-caused injuries to occupants of your business vehicles, irrespective of fault.

Is There Specialized Coverage?

Commercial auto insurance may also include coverages not found in personal car insurance policies such as:

• Inland marine insurance: Covers equipment, cargo and other business property while being shipped over land. It can also insure tools left at a specified location such as a construction site.
• Non-owned vehicle coverage: Protects you and your business when employees use their personal vehicles for business activities. This endorsement may extend to rented or leased vehicles as well.
• Trailer interchange coverage: Provides physical damage coverage for towed trailers that you aren’t the owner of, such as those leased or borrowed from another business.

Businesses That Need Commercial Auto Insurance

Commercial auto insurance is essential for various businesses, particularly those that rely on vehicles for their day-to-day operations. Below are businesses that typically need commercial auto insurance.

Delivery Services

Couriers, food delivery and package delivery businesses should have commercial auto insurance since their vehicles are essential to delivering the orders. Some food delivery services, such as Instacart, don’t offer insurance while driving for their platform and require you to purchase your own commercial auto insurance policy.^[1]

Transportation Services

Businesses that provide auto transportation services, including taxi services, limousine services, bus companies and shuttle services, need commercial auto insurance. Accidents are possible, and customers inside the car increase the need for liability coverage in case someone is injured. Parking and driving in unknown or high-risk areas may leave your vehicle vulnerable to theft or vandalism, which can be covered by a commercial auto policy.

Rideshare companies are unique in that some, such as Uber, maintain commercial insurance on your behalf while you’re driving as part of their business.^[2] Keep in mind that Uber’s coverage only extends while you are driving on their platform, with primary coverage returning to your personal insurance when you’re not active with the service. Additionally, not all ridesharing companies offer similar benefits, so check in advance before you sign up to work with one.

Construction and Contracting

Construction companies will need commercial auto coverage, given the heavy machinery and materials used on job sites and to haul materials. Many vehicles may be left on job sites, opening them up to theft or vandalization. Look at coverage options to ensure you have enough protection for any vehicles you own as a business.

Contractors and other trades, such as electricians, plumbers and landscapers, also typically use trucks, vans or other vehicles to transport tools, equipment and employees to various job sites, necessitating coverage.

Sales and Services Businesses

Companies with sales representatives or service providers who travel extensively to meet clients such as pharmaceutical sales, real estate agents or IT service providers, often need commercial auto insurance. Coverage can apply to a fleet of vehicles that employees use or an employee’s personal vehicle coverage when they use it to travel to job sites.

When Is Commercial Auto Insurance Required?

Commercial auto insurance is required in most states when you have company vehicles.^[3] However, in some cases, your state won't require you to have a commercial auto insurance policy. For example, in New Hampshire where even personal auto insurance is optional if you meet certain criteria, commercial auto insurance is generally recommended rather than required.^[4][5] That said, insurance requirements at the federal level can apply to certain industries and trucks, so be sure to double-check.

How Much Does Commercial Auto Insurance Cost?

Similar to shopping for personal auto insurance, rates will vary by company. For example, business owners who shop with NEXT Insurance can pay as little as $12.50 per month to over $200 for commercial auto insurance.^[6] Factors that dictate the cost of commercial auto coverage include your industry, the number of vehicles you have, your claims history, your location and the type of vehicle you’re insuring. For example, if you’re a transportation company, insuring a box truck can range from $250 to $500 monthly.^[7]

You can typically purchase this plan individually or through a commercial package policy with several other coverages. Below, we’ll list some median annual rates for commercial auto insurance based on various professions.^[6]

How To Choose the Right Commercial Auto Insurance Policy

When exploring insurance options, it’s a good idea to gather three to five quotes from various providers to get a good range of what’s available. These insurers will need details about your enterprise, including your field or industry, the vehicle to be insured, the business location and the total number of vehicles covered.

Using an insurance marketplace like SmartFinancial, you can skip the tedious process of providing this information to each company one at a time. Instead, you complete one questionnaire regarding your insurance requirements and budget, and you'll get paired with a tailored commercial auto insurance policy. Get your free commercial auto insurance quote today!