Finding the best commercial auto insurance is vital for protecting your assets.
More than just a legal requirement, selecting the best insurance for your business can save you money and many potential headaches.
In this article, we will tell you everything you need to know about insurance policies. We will also walk you through the process of finding the best insurance policy for your company's vehicles.
What Is A Commercial Auto Insurance Policy?
It is a type of policy designed to cover businesses against potential risks and losses that come with the use of vehicles for commercial purposes.
For example, vehicle damage or an accident involving your business vehicles.
It can offer:
- liability for accidents and injuries
- coverage for physical damage to your vehicles
- uninsured motorist coverage
- coverage for goods in transit
But here's an important point - it's not just for businesses with a fleet of trucks or vans.
Even if your business has a single car for tasks like visiting clients or delivering goods, you still should have commercial auto insurance.
It is like your typical personal auto insurance policy, but it handles the heavier demands and higher risks of using a vehicle for business.
Who Needs To Get This Type Of Insurance Policy?
Any business that uses a vehicle for work-related tasks—from a single-man startup to a multinational corporation—may need
commercial vehicle insurance coverage.
You might need insurance if your business:
- Owns, leases, or rents vehicles such as cars, vans, or trucks.
- Has employees who drive vehicles to conduct business.
- Provides cars for employee use.
- Transports goods or people for a fee, like a delivery service or taxi business.
- Operates heavy-duty vehicles that can cause more damage in an accident.
- Works with high-risk materials that it needs to transport.
Even if you're a freelancer or self-employed professional driving your own vehicle for work (outside of your daily commute), you might need it too!
Why? Because personal auto policies might not cover accidents that happen during business-related drives.
How Much Does Commercial Auto Insurance Cost?
According to industry statistics, in September 2021, the average cost for a commercial auto insurance policy in the US typically ranged between $600 to $2,400 per vehicle per year.
Small business owners using personal vehicles for business could pay closer to the lower end. On the other hand, companies with large, heavy-duty vehicles might find themselves leaning toward the higher end.
But remember, the costs can vary significantly based on your business's unique needs and risks.
Fortunately, you can use a loan to pay for your business insurance policy.
Apply For A Business Loan!
The Different Factors That Can Affect The Cost Of Commercial Vehicle Insurance
- Vehicle Type. The vehicle's type, make, and model can significantly impact your premium. Bigger, heavier vehicles can cause more damage in an accident. Therefore, it might cost more to insure.
- Vehicle Usage. The greater the usage, the higher the risk, and potentially, the higher the insurance cost.
- Driving Records. Your drivers' driving histories can affect your rates. Drivers with clean records can help lower your premium. Those with a history of accidents or traffic violations can raise it.
- Location. Where your business operates also plays a role. Areas with higher traffic, accident rates, or vehicle theft can lead to higher insurance costs.
- Coverage Limits. The more coverage you want, the more you'll have to pay. Choosing higher liability limits and adding optional coverages can increase your premium.
- Deductible Amount. This is the amount you agree to pay out of pocket when you make a claim. A higher deductible can lower your premium, but it also means you'll pay more when a claim occurs.
- Cargo. What you're transporting can affect the cost too. Are you hauling fresh produce or transporting hazardous materials? The latter can increase your premium.
- Credit History. Some insurers also consider the business owner's credit history. A good credit score can signal insurers that you're less risky, potentially lowering your premium.
How To Get The Best Deal
Here are a few handy tips to help you nab that ideal insurance policy without breaking the bank:
- Compare. It's wise to shop around and compare rates from different insurance providers. Don't just focus on the cost, but also compare the coverage, limits, and deductibles.
- Bundle Your Policies. Many insurers offer discounts if you bundle multiple policies with them. So, if you have other insurance needs, consider getting all your policies from the same provider.
- Maintain a Clean Driving Record. Hiring drivers with clean driving records can help lower your premium. Regularly providing safe driving training for your employees can also be beneficial.
- Choose Your Vehicles Wisely. If you're in the market for a new vehicle for your business, consider its insurance cost. Some vehicles are cheaper to insure because they're considered safer or less prone to damage.
- Increase Your Deductible. If you're willing to pay a higher amount out of pocket in the event of a claim, you could lower your premium by increasing your deductible. Just make sure it's an amount you can comfortably afford.
- Take Advantage of Discounts. Many insurance companies offer discounts for things like:
- having safety features in your vehicles
- paying your premium in full
- being a long-term customer
- even for being a new customer
- Regularly Review Your Policy. Periodically review your policy to make sure you're not over or under-insured. If your risk has decreased, inform your insurer—it might lower your premium.
Different Types Of Commercial Auto Coverage
Collision coverage is beneficial for businesses with a higher risk of vehicle damage. It covers damages to your company's vehicle resulting from collisions, whether with another vehicle or a stationary object.
The average cost varies significantly, depending on factors such as:
The average cost can range from $600 to $1,200 per vehicle per year.
- the age, make, and model of the vehicle
- driving records of the employees
- the business's location
This large range is due to the variables like vehicle type and driving history.
The deductible is also a determining factor. A higher deductible will generally result in lower premiums, which means you'll pay more out-of-pocket in the event of an accident.
Liability coverage is crucial in protecting your business from potentially significant financial losses.
This coverage will handle the cost if your company vehicle is in an accident causing:
- bodily injury to others
- damage to their property
The price of liability insurance depends on several factors, including:
On average, you can expect to pay between $750 and $2,000 per vehicle per year.
- the size of your business
- the number of vehicles
- your previous claims history
Higher-risk businesses or those with a history of claims may see rates on the higher end of the spectrum.
Keep in mind that each state sets minimum liability coverage limits, but these may not be sufficient for your business's needs. It's often recommended to have liability coverage beyond these minimums.
Specified Perils Coverage
Specified perils coverage caters to businesses with unique protection needs. It covers losses from specific events named in the policy, such as fire, hail, or theft.
The cost of this coverage depends on:
- the specific risks insured against
- the likelihood of these events occurring in your business's location
For this reason, it's challenging to provide a precise average cost.
When making a claim, it's crucial to provide appropriate evidence to prove that the damage was due to one of the specified perils.
Comprehensive coverage protects your company vehicles against non-collision-related damage. These can include damages caused by natural disasters, vandalism, or theft.
This type of coverage is particularly valuable if your business operates in areas prone to such events.
The cost of comprehensive coverage depends on:
- value of your vehicles
- location of your business
- deductible you choose
Costs typically range from $500 to $1,000 per vehicle per year.
Similar to collision coverage, choosing a higher deductible can reduce your premium but increases your out-of-pocket costs if you file a claim.
Best Insurance Providers for Company Vehicles
Best for bigger businesses with larger fleets.
State Farm offers personal insurance agents for each client. They control about 20 percent of the auto insurance market, easily making them a top company.
Their coverage is well-rated but comes with a slightly higher price tag than some alternatives. State Farm policies are generally about $779 per six-month period.
Best for businesses looking for top-tier coverage with a lower price tag.
Progressive has about 10 percent of the auto insurance market under its belt.
As another popular provider, Progressive has similar pricing but still slightly lower than the one State Farm offers. Policies are about $771 per six months.
Best for businesses looking for quality insurance with excellent customer service.
GEICO is perhaps the best-known name among auto insurance providers.
They offer lower rates than the industry average and have some of the best customer satisfaction ratings.
GEICO's policies tend to be more affordable than some alternatives at about $580 per six months.
Best for businesses with larger fleets and a big budget.
Allstate policies are among the most expensive: around $947 for six months.
Best for businesses owned by military members or their family members.
USAA only serves military members and their families. However, they still make up a notable portion of the insurance market.
USAA receives top-quality customer satisfaction ratings.
They also offer significant car insurance discounts for qualifying drivers. Their rates are often the most affordable of major insurers.
Best for businesses that want an active insurance provider that offers more for a slightly higher price.
Farmers is a fairly popular insurer with solid ratings.
The company tends to be slightly more expensive than the other insurers, usually around $754 for six months' coverage. However, they offer each customer an individual agent for individualized customer service.
Best for businesses with larger budgets with low customer service needs.
Liberty Mutual generally charges higher prices than other providers, often about $260 for six months.
Also, they are slightly below average in customer service ratings.
Best for smaller businesses looking for reliable insurance that does not require a large budget.
Nationwide offers relatively cheap premiums.
While their customer service ratings are average, their policy cost is $557 for six months. This puts their pricing at about $125 more than their average competitor.
Best for medium-sized businesses looking for good customer service at an affordable price.
American Family is a smaller insurer than most of the others on this list. It generally receives favorable customer service reviews with few complaints.
It offers one of the cheapest premiums at only $545 for six months' coverage.
Best for businesses looking for a smaller provider's service with affordable rates.
Travelers is another smaller provider that offers policies for less than their average competitors with good customer service ratings.
This company receives a high rating and, at $553 for six months, is about $130 cheaper than the average provider.
Need A Business Loan To Finance Your Insurance?
How To Choose The Right Auto Insurance Policy
Here are a few pointers:
- Assess Your Needs. What types of vehicles does your business use? How often and where are they driven? What kind of goods are you transporting? The answers to these questions will give you a good idea of the types and amount of coverage you'll need.
- Know Your Options. There are many commercial auto insurance coverage options available in the market. Understand what each coverage offers and consider which ones you need.
- Seek Professional Help. Insurance agents or brokers can provide valuable advice and help you navigate your options. They can also help you understand the fine print in insurance policies.
- Compare Quotes. Compare not just the price but also the coverage, limits, and deductibles. Remember, the cheapest policy isn't always the best.
- Check the Insurer's Reputation. Look at their financial strength ratings, customer reviews, and claim settlement ratio. You want a financially stable insurer with a reputation for good customer service and prompt claim handling.
- Consider Your Budget. While you don't want to skimp on necessary coverage, you must also consider what you can afford. Remember, insurance is an essential business expense, so plan for it in your budget.
- Read Before You Sign. Once you've chosen a policy, read it carefully before signing. Ensure you understand the terms and conditions and clarify doubts with your agent.
How To File A Claim For Commercial Auto Insurance
Here are the steps you'll typically need to follow:
- Ensure Safety First. Immediately following an accident or incident, the priority is to ensure everyone's safety. If necessary, call for medical help. If it's a serious accident, contact the police as well.
- Document the Incident. Collect as much information as you can from the scene. Take photos or videos of the damage, the scene, and other relevant details. Also:
- Gather contact information from any witnesses.
- If it's an accident involving another vehicle, get the other driver's details and insurance information.
- Contact Your Insurance Company. Contact your insurance company to report the incident as soon as possible. They'll provide you with instructions on the next steps. It's a good idea to have your policy number handy for this.
- Fill Out the Claim Form. Your insurer will provide you with a claim form. Fill it out completely and accurately. Be as detailed as possible about the incident, the damage, and any injuries.
- Submit Necessary Documentation. Along with the claim form, submit any documentation that supports your claim. This could include photos of the damage, a police report, medical bills, repair estimates, etc.
- Cooperate with the Claims Adjuster. They may inspect the vehicle, review the documentation, and possibly interview you and any witnesses. Cooperate fully with them and provide any additional information they may request.
- Review Settlement Offer. The insurer will provide a settlement based on the adjuster's report and your policy terms. Review this offer carefully. If you disagree with it, don't hesitate to negotiate.
- Finalize the Claim. Once you agree with the settlement, the insurer will finalize the claim. They will pay for the repairs, medical, or other expenses covered under your policy.
The Importance Of Business Car Insurance
Business car insurance is a fundamental safeguard for any company that relies on vehicles for its operations.
According to the Insurance Information Institute, it is a legal requirement in nearly all US states and provides critical financial protection
Consider that in 2019, the National Safety Council estimated the average economic cost of a car crash was about $27,000 per nonfatal disabling injury.
And beyond just the tangible benefits, having business car insurance can also enhance your company's reputation by showcasing your commitment to responsibility and preparedness
Need A Helping Hand To Pay Your Insurance Policy?
Finding the best car insurance plan for your company car is essential. Make sure not to rush into any decisions.
Weigh your options carefully from among the major providers. While each provides roughly analogous coverage, they vary widely in cost, quality, and customer service.
Remember that the best car insurance for your company will fit your specific needs. Keep in mind that this may cost more than your personal car insurance.
And let's not forget, while selecting the perfect car insurance plan is crucial, it is equally important to consider how you will fund these potentially substantial premiums.
That's where Camino Financial comes in.
As a committed lender, Camino Financial understands the unique needs of businesses like yours.
Our loans can provide the necessary funds to cover your insurance premiums. This ensures your business doesn't have to compromise on coverage due to financial constraints.
So, don't wait any longer. Apply today!
Apply For A Business Loan!
What do the numbers on my insurance policy mean?
These numbers, called "covered auto designation symbols," indicate the vehicles insured for the coverage.
These go from 1 to 9 plus 19, each symbol representing a specific category. Symbol 1 indicates any vehicle, while symbol 2 indicates only owned cars, etc.
What are the 3 types of commercial insurance?
The three main types of commercial insurance are:
These cover legal liabilities, property damage, and employee-related risks, respectively.
- liability insurance,
- property insurance,
- and workers' compensation insurance.
Does Progressive have commercial policies?
Yes, Progressive offers a wide range of commercial insurance policies, including:
- commercial auto insurance,
- general liability insurance,
- workers' compensation,
- and more.
What is the difference between commercial and business auto insurance?
Commercial auto insurance and business auto insurance are essentially the same.
Both provide coverage for vehicles used for business purposes. The terms are often used interchangeably in the insurance industry.
What does commercial insurance cover?
A commercial auto policy covers a broad range of risks that businesses may face.
This can include:
The specifics depend on the individual policy and coverages selected.
- property damage,
- legal liabilities,
- employees' injuries at work,
- vehicle damages or liabilities if you have a commercial auto policy,
- and more.
Is Commercial Car Insurance More Expensive Than Personal Auto Insurance?
In some cases, the commercial auto insurance cost can be higher than that of personal car insurance. However, this depends on:
- policy details,
- and how many vehicles you insure.
Should you have an insurance policy for each car?
Yes. This is true even if you use personal vehicles for business use.
The proper insurance cover protects businesses when employees use private cars to run business errands or go to meetings. If there is a severe accident, employees' insurance coverage may not be enough to cover your business.
Business car insurance plans list:
- the number and types of vehicles covered,
- the kinds of damages included and their causes,
- the obligations of both parties,
- and the business and insurance provider.
What do business car insurance plans cover?
Business auto policies, sometimes called business auto coverage forms, cover the uses of:
Some policies may cover vehicles leased or owned by a business, vehicles owned by employees, and hired vehicles. Business car insurance policies cover damage and liability.
They give commercial auto coverages for any company-use vehicles that drive on public roads. Each business vehicle has coverage, allowing companies to select specific coverage for different parts of their fleets.
- and other vehicles for business purposes.