Commercial Auto Insurance: What You Need To Know

Commercial auto insurance is a type of business insurance that covers motor vehicles used for business purposes, such as delivering inventory, ferrying passengers and traveling to client locations or project sites.

Commercial auto insurance is a business insurance policy that provides liability and physical damage coverage for vehicles used for work-related activities.

Similar to a personal auto policy, commercial car insurance includes liability coverage and other state-required coverages, such as uninsured motorist coverage, with the option to add endorsements for an additional cost.

Keep reading to learn more about commercial auto insurance, what it covers, who needs it and its cost.

Key Takeaways

Commercial auto insurance helps cover your business when you or your employees get into an accident, reimbursing you for covered expenses and legal fees.
Coverage typically includes bodily injury and physical damage liability but may include other options depending on state mandates or endorsements.
On average, you’re likely to pay between $100 and $1,000 per month for commercial auto coverage.
Multiple factors, such as location, insurer, coverage limits, business industry and the number of vehicles covered, can affect costs.
Auto insurance is required in nearly every state, so if you consistently use your vehicle for business purposes or the business owns it, you’ll need a commercial auto policy.

What Is Commercial Auto Insurance?

Commercial auto insurance helps protect your business from the costs of paying for physical damage or injuries when you or an employee driving the covered vehicle is at fault for an accident. Depending on the additional coverage options you select for your policy, commercial auto insurance can also help cover losses from named perils, damage to your vehicle, medical expenses for you and your employees, legal fees and more.

Commercial auto insurance works similarly to personal auto insurance, covering damages and injuries caused by an accident. The key difference is that commercial auto insurance is specifically designed for vehicles used for business purposes, such as delivering inventory, traveling to client or project locations, or selling from the vehicle itself, like a food truck.

How Does Commercial Auto Insurance Work?

If you or your employee is at fault in an accident, your commercial auto policy allows you to file a claim for reimbursement for liability expenses and, if you buy the right coverage, damage to your vehicle. After your claim is approved, you’ll be reimbursed for these costs minus any deductible.

What Is Considered a Commercial Vehicle for Insurance?

Any vehicle used in the course of a business, occupation or profession is considered business use and requires a commercial policy. However, commuting to work is still considered personal use and does not require commercial coverage.^[1] Additionally, some vehicles may or may not qualify as commercial vehicles for insurance purposes under federal and state laws.^[2]

Who Needs Commercial Auto Insurance?

While your insurance company may allow for limited business use for your vehicle under personal auto insurance, a vehicle used exclusively for business or owned by the business won’t be covered unless you have a commercial auto policy.^[3]

Common types of businesses or professions that are likely to use a vehicle for business and might need a commercial policy include:

Electricians
Plumbers
HVAC technicians
Contractors and subcontractors
Landscapers
Caterers and other food vendors
Businesses with company cars
Delivery companies

Some rideshare companies and freelance gigs that use cars may offer commercial auto insurance when actively driving for the company, but not always. For example, the delivery service Instacart doesn’t offer any form of insurance to its drivers, but Uber does.^[4][5]

What Does Commercial Auto Insurance Cover?

Bodily injury and property damage liability are the most common coverage types because they are required in nearly all states. Below, we’ve outlined other types of coverage that may also be mandated in your state.

Bodily injury liability: Pays for medical bills when a company worker can be held responsible for injuries caused to another party while driving a company car.
Property damage liability: Pays for repair bills or reimburses for damaged belongings when a company worker can be held responsible for property damage to another party’s car or belongings
Collision: Pays to repair or replace your company car if it is totaled in a car accident, regardless of who is at fault. While typically optional, this coverage may be required by your lender or lessor if you are financing or leasing your company vehicle.
Comprehensive: Covers non-collision losses, such as fire, theft, hail and vandalism. This coverage is typically required by your lender or lessor when you finance or lease your company vehicle.
Uninsured/underinsured motorist: Covers your losses if the company car is involved in a car accident and the other driver is at fault but has no auto insurance or insufficient coverage. It can also cover hit-and-run accidents.
Medical payments coverage or personal injury protection (PIP): Provides medical, disability and death benefits for you or an employee after a car accident in a company car, regardless of which driver is at fault.

What Isn't Covered by Commercial Auto Insurance?

Commercial auto insurance will contain coverage exclusions and, depending on what coverage you buy, may not cover certain losses. Generally, you will not be covered for:

Liability costs incurred outside a company vehicle (look into general liability insurance instead)
Personal property inside your commercial vehicle
Intentional losses, such as filing a collision claim after intentionally driving the company car into a tree
Medical bills when an employee drives the covered vehicle for personal use, depending on the insurance company
Use of a company vehicle for illegal activities
Wear and tear
Floods and earthquakes

Commercial Auto Insurance vs Personal Car Insurance

Below is a breakdown of the differences between commercial and personal auto insurance:^[6]

Category	Personal Car Insurance	Commercial Auto Insurance
When you need it	When you own a vehicle and drive it for personal use	When you or your business owns the vehicle and drives it for business use
Types of cars covered	Passenger vehicles, such as SUVs and sedans	Larger and riskier vehicles, such as heavy-duty trucks, delivery vans and construction vehicles
Cost	Tends to be less expensive by comparison	Tends to be more expensive by comparison
Tax deductible	Not tax deductible^[7]	May be tax deductible^[8]

Commercial Auto Insurance vs Hired and Non-Owned Auto (HNOA)

Commercial auto insurance policies cover vehicles owned by you or the business itself. However, if you don’t own the vehicle, you might need hired and non-owned auto coverage (HNOA).^[9]

Hired coverage: This coverage is used for cars that you regularly use for business that are rented, leased or borrowed.
Non-owned auto coverage: This coverage covers personal vehicles owned by your employees that are used for work purposes.

How Much Does Commercial Auto Insurance Cost?

How much you’ll be expected to pay for commercial auto insurance will depend on various factors, some of which include:^[10]

Mileage driven: Businesses that utilize their vehicles more frequently will likely have higher premiums.
Number of vehicles: You’ll likely pay more for coverage if you have multiple vehicles.
Vehicle type: Rates can vary depending on a vehicle’s year, make and model.
Business’s location: Businesses in more densely populated areas will likely have higher rates.
Claims history: If you have a record of insurance claims, you may be seen as a higher risk by your insurer, causing them to increase your premium in response.
Driving record: Your driving record and that of your employees could impact your rates if you have a history of accidents. Most insurance companies only consider the previous three to five years when looking at your driving record.
Additional coverages: Adding optional coverages, such as comprehensive and collision, will increase your monthly rates.
Deductible: Lower deductibles typically result in higher monthly premiums. In contrast, raising your deductible can lower your rates.

Average Commercial Auto Insurance Cost

On average, the cost of commercial auto insurance ranges from $100 to $1,000 per vehicle per month.^[10] However, rates will vary significantly based on the underwriting factors mentioned previously, so be sure to shop around to better understand your coverage options.

Commercial Auto Insurance Requirements

If your business regularly uses or owns vehicles for business-related purposes, you’ll need a commercial auto policy to meet state requirements. Liability coverage is required in most states, except New Hampshire, which means you’ll likely need commercial auto insurance if you use a vehicle for business purposes.^[11][12]

Types of Vehicles Covered by Commercial Auto Insurance

Depending on your business needs, commercial auto insurance can cover the following types of motor vehicles:^[13]

Cars, SUVs and vans
Delivery trucks
Pickup trucks
Box trucks
Food trucks
SUVs
Trailers (may be automatically covered in existing commercial auto policy if they meet insurer’s weight requirements)^[14]

How To Lower Your Commercial Auto Insurance Costs

Below are a few ways to lower your commercial auto insurance costs:

Raise your deductible amount
Lower your coverage limits
Avoid making unnecessary claims
Keep your and your employees’ driving history clean by avoiding accidents
Take advantage of discounts, such as paying your annual premium in full up front^[15]

Commercial Auto Insurance at a Glance

Commercial auto insurance covers vehicles used for business purposes, including company cars, delivery vans and work trucks.
Liability coverage is required in most states, meaning businesses that own or regularly use vehicles for work typically need a commercial auto policy.
Commercial auto insurance generally costs between $100 and $1,000 per vehicle per month, depending on risk factors such as vehicle type, claims history and business location.
Coverage may include liability, collision, comprehensive, uninsured motorist and medical payments protection, depending on the policy and state requirements.
Commercial policies may also cover employees driving company vehicles and, in some cases, personal vehicles used for work.
Businesses that rent or borrow vehicles may need hired and non-owned auto (HNOA) coverage instead of or in addition to a commercial auto policy.
Commercial auto insurance differs from personal auto insurance because it is designed for vehicles used in business operations and typically offers higher liability limits.

How To Get Commercial Auto Insurance

You’ll want to get quotes from three to five insurance companies to understand what prices and coverage options are available. You’ll likely need to provide information about yourself, your employees, your business and your vehicles. This process may become tedious, as you’ll have to provide this information to each insurance company one at a time.

You can speed up this process by using an insurance marketplace like SmartFinancial. After you complete a brief questionnaire to better understand your needs, we can connect you with a licensed insurance agent to help you find your ideal policy. Click here to get free commercial insurance quotes today!

Ready to Compare and Save? Get Your Free Commercial Auto Insurance Quotes Now!

FAQs

Is commercial auto insurance required by law?

Yes. Commercial auto insurance is legally required when a business regularly uses vehicles for work. Since liability coverage is mandatory in most states except New Hampshire, you’ll likely need commercial auto insurance to legally drive a vehicle as part of your business.^[3][4]

Does personal auto insurance cover business use?

No. Personal auto insurance typically does not cover business use of a vehicle. However, your provider may customize your policy to permit occasional business use, such as picking up supplies from another location or running a brief, irregular errand while on the clock.^[3][5]

Is commercial auto insurance tax-deductible?

Yes. Commercial auto insurance premiums are generally tax deductible as a business expense. Businesses may deduct the cost of premiums for different types of commercial insurance, including commercial auto insurance.^[8]

Does commercial auto insurance cover employees driving?

Yes. Commercial auto insurance generally covers employees who drive company vehicles for work. This can include leased, rented and owned company vehicles, as well as personal vehicles used for business purposes in some cases.^[13]

What vehicles require commercial auto insurance?

Commercial auto insurance is required for vehicles owned by a business or used regularly for business purposes. This can include company cars, delivery trucks and other vehicles used to transport goods, equipment or employees.^[16]

Sources

GEICO. “When Do You Need Commercial Vehicle Insurance?” Accessed March 12, 2026.
Powell and Pisman Injury Lawyers. “Breaking Down the Definition of a Commercial Vehicle.” Accessed March 12, 2026.
Insurance Information Institute. “Business Vehicle Insurance.” Accessed March 13, 2026.
Instacart. “Contracts.” Accessed March 12, 2026.
Uber. “Insurance for Rideshare and Delivery Drivers.” Accessed March 13, 2026.
GEICO. “Commercial vs Personal Auto Insurance: Understanding the Differences.” Accessed March 13, 2026.
Nationwide. “Is Car Insurance Tax Deductible?” Accessed March 13, 2026.
Internal Revenue Service. “Tax Guide for Small Business,” Page 37. Accessed March 13, 2026.
The Hartford. “Hired and Non-Owned Vehicle Insurance.” Accessed March 13, 2026.
Farmers. “How Much Is Commercial Auto Insurance for Businesses.” Accessed March 13, 2026.
Nationwide. “Commercial Auto Liability Insurance.” Accessed March 13, 2026.
New Hampshire Insurance Department. “New Hampshire Insurance Department 2022 Automobile Insurance Consumer Frequently Asked Questions,” Page 5. Accessed March 13, 2026.
The Hartford. “Commercial Auto Insurance Coverage.” Accessed March 13, 2026.
GEICO. “What Is Commercial Auto Insurance for Businesses?” Accessed March 13, 2026.
Travelers. “Travelers Commercial Auto for Small Business.” Accessed March 13, 2026.
The Hartford. “Do I Need Commercial Auto Insurance?” Accessed March 13, 2026.

Commercial Auto Insurance: Coverage, Cost, Requirements and How It Works

Preston Micalizio

Richard Murphy

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