Does My Business Need Uninsured Motorist Coverage?

Several states require uninsured motorist coverage, which can help protect your business from added expenses if one of your commercial vehicles is impacted by a car accident with an at-fault driver who lacks car insurance. Even if this type of commercial auto insurance is optional, avoiding the hassle caused by an uninsured motorist accident may be worth it.

Keep reading to learn more about commercial uninsured motorist coverage, how it can protect your employees and company vehicle and what factors affect its cost.

On This Page

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  What Is Commercial Uninsured Motorist Coverage?

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  Is Uninsured Motorist Coverage Required for Businesses?

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  What Does a Commercial Uninsured Motorist Policy Cover?

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  How Much Does Commercial Uninsured Motorist Coverage Cost?

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  What Types of Businesses Need Uninsured/Underinsured Motorist Coverage?

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  How To Get Uninsured Motorist Coverage for Your Business

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  FAQs

What Is Commercial Uninsured Motorist Coverage?

Commercial uninsured motorist coverage is a component of commercial auto insurance that protects businesses when their commercial vehicle gets into an accident with an at-fault driver who is uninsured. It may also cover expenses caused by a hit-and-run driver. It helps cover medical expenses for your employees or passengers if injured and damage to your covered vehicle caused by the accident.

Without commercial uninsured motorist coverage, your company may be left covering losses out of pocket in a motor vehicle accident when the other driver is at fault.

While it may be possible to take the at-fault driver to court to recoup these costs, they may not be financially able to pay, or the verdict may not be the full amount of repairs or medical expenses. While this coverage is sometimes optional, it may be worth adding this insurance option to protect against these scenarios.

What Is Commercial Underinsured Motorist Coverage?

Commercial underinsured motorist coverage works similarly to uninsured motorist coverage, except it covers you when the at-fault driver has insurance but not enough to cover your losses incurred from the accident. For example, some states only require a minimum of $15,000 in bodily liability coverage for drivers, which may not be enough to cover high medical costs after a severe accident.

In some states, insurers may automatically combine these two types of coverage.^[1]

Is Uninsured Motorist Coverage Required for Businesses?

Uninsured motorist coverage is required for businesses operating commercial vehicles in states where it’s required. For example, the following states require uninsured motorist coverage for all drivers:^[2]

*Auto insurance is possibly optional; UM/UIM insurance required if you buy auto insurance
**Required if you buy liability coverage beyond state minimum requirements

Outside of these states, uninsured motorist coverage is typically optional. However, as we’ll discuss later, it may be worth considering purchasing this policy, given the potential risk of an accident caused by an uninsured driver.

What Does a Commercial Uninsured Motorist Policy Cover?

A typically commercial uninsured motorist policy will typically cover the following:

• Uninsured motorist/uninsured motorist bodily injury (UM/UMBI) insurance: This covers medical bills for those injured in an accident, as well as pain and suffering and lost wages when another driver is at fault and doesn’t have insurance. It may also cover injuries caused by a hit-and-run driver.
• Underinsured motorist bodily injury (UIM/UIMBI) insurance: This covers medical bills for those injured in an accident when another driver is at fault and doesn’t have enough liability insurance to cover your losses. It may be included in the UM section of your policy, depending on your state.^[1]
• Uninsured motorist property damage (UMPD) insurance: This covers damages to your vehicle caused by another motorist without insurance. Depending on your state, it may also protect against damages caused by a hit-and-run driver.^[1]

Depending on your insurance policy and state regulations, these options may be separate, allowing you to pick and choose which type of coverage you want for your business. However, they may also come combined under a single maximum limit, which may be easier to manage.^[1] UMPD may also be unavailable in some states, such as Arizona, where it’s covered by collision insurance.^[3] Review your state laws to see how you can protect yourself from uninsured or underinsured drivers.

It’s worth noting that UM/UIM insurance may have some overlap in coverage with collision insurance and Medpay or personal injury protection (PIP), as all can apply when the other driver is at fault. However, UM/UIM insurance offers additional benefits, such as covering pain and suffering, which Medpay/PIP typically may not.^[4][5] It may also include a collision deductible waiver that can pay toward your collision claim deductible, further reducing your out-of-pocket cost.^[6]

What Isn’t Covered?

Here are a few instances where uninsured motorist insurance won’t likely cover you:

• When a personal vehicle that isn’t part of your commercial policy is used for business purposes
• When you intentionally damage your vehicle
• When you or an employee are at fault for an accident

How Much Does Commercial Uninsured Motorist Coverage Cost?

Commercial uninsured motorist coverage is unlikely to be sold as an individual policy and is usually included as part of a commercial auto insurance policy, which can range in price. Factors like the insurance company itself and what additional coverage options you choose may affect that total cost. For example, the average monthly premium for commercial auto insurance from The Hartford is $574.^[7] Meanwhile, 43% of NEXT Insurance customers pay $100 to $200 monthly for commercial auto insurance.^[8]

Other factors like the type of vehicle you drive may affect cost, such as larger trucks that could be more likely to be struck on the road because of their increased size. Employees with poor driving records may also increase costs, as they are at higher risk of getting in an accident. Your industry is another cost-affecting factor, with some professions being more risky than others to insure. For example, the median monthly cost for cosmetologists insured by NEXT Insurance is $91, but $220 for restaurants.^[8]

Where your business is located may also factor into costs, as some areas have an increased risk of uninsured drivers. Roughly 25% of drivers in the District of Columbia and New Mexico didn’t have minimum liability insurance in 2022, which could lead to higher rates when selecting this coverage option in those areas.^[9]

What Types of Businesses Need Uninsured/Underinsured Motorist Coverage?

Uninsured and underinsured motorist coverage can be invaluable for businesses that operate in a state with a high percentage of uninsured drivers. However, as of 2022, 14% of all drivers in the U.S. didn’t have auto insurance, so there is a risk no matter where you’re driving.^[9]

Those who regularly drive with passengers, including customers, vendors and other employees, may also want to consider UM/UIM coverage, as more people involved in an accident could increase costs.

For example, if you operate a landscaping company where multiple employees drive in the same car to a job site, getting into a serious accident could result in high medical bills, which may exceed the other driver’s liability coverage.

How To Get Uninsured Motorist Coverage for Your Business

Commercial uninsured motorist coverage is optional, mandatory or unavailable, depending on your state. If it’s only optional, contact your commercial auto insurance company to see if you can add the coverage to your policy.

If you don’t yet have commercial auto insurance or would like to switch providers, you should get quotes from three to five insurers to get a range of options. Keep in mind you’ll typically need to provide information on the covered vehicle and your business each time.

This process can become tedious, but you can speed things up using an insurance marketplace like SmartFinancial. After answering a short questionnaire, we’ll connect you with a licensed insurance agent to help you get a commercial auto policy that includes uninsured motorist coverage and other types of coverage you may need for your business. Click here to get a free quote today!