Cargo Van Insurance: What Small Business and Delivery Drivers Need to Know

If you use a cargo van for business purposes, cargo van insurance is essential. Cargo van insurance can help cover the cost of medical expenses or property damage if you or an employee get in an accident while driving your company van.

Here’s what you should know about the different types of cargo van insurance, mandatory coverages, the cost of cargo van coverage, and ways to reduce your insurance premiums.

What is cargo van insurance?

Cargo van insurance, also known as business van insurance, is a type of commercial auto coverage that provides protection for company-owned vans used for business purposes.

Cargo van insurance typically includes protection for damage or injuries that occur while using your van. Most cargo van policies include liability coverage for bodily injury and property damage, collision coverage, and comprehensive coverage. If you want to ensure your cargo is protected, you may need to purchase a separate cargo insurance policy.

Types of insurance you need for a cargo van business

If you use your cargo van to deliver packages, haul tools, or do contracting work, then your personal auto insurance isn’t adequate.^[1]

Some common types of coverage you may want to consider for your cargo van include:

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  Commercial auto liability

  Commercial auto liability coverage pays for someone’s medical expenses if an employee causes an accident while driving a company vehicle. If your employee damages another person’s vehicle or property, it’ll also help cover the cost.

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  General liability

  Also called business liability insurance or commercial general liability insurance, you can purchase a stand-alone policy or bundle coverage through a business owners policy (BOP). General liability insurance helps cover third-party claims.

• 

  Physical damage

  This represents a group of coverages that protect your vehicle, including collision and comprehensive insurance.

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  Motor truck cargo

  Also known as cargo insurance, it protects the goods in your van if the cargo is damaged, lost, or destroyed during transit.

• 

  Trailer interchange

  If you’re hauling a trailer you don’t own, you’ll need trailer interchange insurance. It covers physical damage to the trailer while in your possession.

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  Workers’ compensation

  If you have employees, most states require you to carry workers’ compensation coverage. Workers’ comp protects your employees if they’re hurt on the job. It also provides employer protection from possible lawsuits associated with workplace injuries.

Mandatory cargo van insurance coverages

The Federal Motor Carrier Safety Administration (FMCSA) is an organization within the Department of Transportation. It helps prevent commercial motor vehicle-related injuries and fatalities.

The FMCSA establishes the liability insurance requirements for cargo haulers.^[2]

• Motor carriers and freight forwarders: Cargo vans carrying freight must carry between $750,000 and $5 million of liability insurance, depending on the commodity. But if the freight is non-hazardous and being transported in a vehicle that weighs less than 10,001 pounds, only $300,000 of coverage is required. Passenger cargo vans must carry $5 million in liability coverage or $1.5 million if you’re operating vehicles with seating capacity for 15 or fewer passengers.

• Household goods motor carriers: Vehicles must have $5,000 in coverage per vehicle and $10,000 per occurrence, in addition to the liability coverage mentioned above. These are the minimum requirements, but many people will need additional coverage.

Does cargo van insurance cover your cargo?

Cargo insurance helps cover the costs of damage to the goods you’re transporting. In many cases, standard van policies don’t cover your cargo, and you’ll need to purchase cargo coverage as an add-on to your commercial auto policy.

When it comes to how much cargo insurance you need, you should have enough to cover the amount of cargo you haul. As an industry standard, many freight brokers require a minimum of $100,000 in cargo insurance.

How much does cargo van insurance cost?

Annual premiums typically range from $1,200 to $6,800 and higher. Monthly premiums generally range from $100 to $570.

Many factors affect the cost of cargo van insurance, such as the type of cargo you carry, the region where you operate, your loss history, and the coverage limits you choose.

Like with most insurance, the coverages you select can significantly affect the cost of your premiums. Basic limits generally start at $300,000, with the industry standard at $1 million. Depending on the type of deliveries, you might opt for higher limits, which can further increase the cost of insurance.^[3]

Factors that affect the cost of cargo van insurance

The cost of commercial van insurance will vary based on several factors, including:

• Cargo type: Generally, riskier or high-end cargo, such as refrigerated (or reefer) freight or hazardous materials, will result in higher insurance premiums. Hauling electronics or perishable goods can also increase your premiums due to the higher risk of theft and damage during handling.

• Coverage limits: Higher coverage limits will result in higher costs.

• Radius of travel: Long-haul operators and drivers operating across state lines generally pay higher premiums.

• Driver record: Drivers with less experience and drivers with poor records generally pay higher premiums.

• Vehicle value: The make, model, and value of your vehicle will affect your insurance premiums. Newer vehicles and those with advanced safety features tend to have lower rates.

• Loss history: A history with several past claims and losses can increase your premiums.

• State requirements: Different states have different liability limits.

If you modify your cargo van, such as adding secure shelving, this can affect your physical damage insurance premium.

How to get and compare quotes for cargo van insurance

Before you select and purchase insurance, it’s a good idea to compare multiple quotes. You can consider nationally recognized insurers, like GEICO and Progressive, and specialty insurers, like Northland Dynamic Specialty. 

Specialty insurance companies may be especially well-suited for last-minute or expediting operations because they can accommodate the unique risks related to driving in the city.

To get and compare quotes for cargo van insurance, follow these steps:

1. Gather information. To prepare, collect all relevant information, including your van details, driver records, cargo records, usage radius, and desired driving limits.

2. Obtain multiple quotes. You can hire an insurance broker, use an online comparison platform, or get quotes directly from different insurers.

3. Compare policies. Review policies from multiple insurers, considering factors like coverage limits, deductibles, and exclusions.

4. Pick a policy and pay your premium. Once you’ve narrowed your options, choose a policy and pay your premium. Check if you can get a discount for paying in full instead of monthly.

How to save money on cargo van insurance

If you want to reduce the cost of cargo van insurance, you have several options, such as:

• Look for discounts. When comparing insurance companies, see if you qualify for any discounts, such as those for safe driving or paying in full.

• Increase your deductible. If you can afford to pay a higher deductible, this will help lower your monthly premium.

• Bundle policies. If you need to insure multiple vehicles or purchase other types of business insurance through the same insurer, see if you qualify for bundling discounts.

• Maintain a safe driving record. Having a clean driving record can help reduce your premiums.

• Limit the radius of travel. Operating your van within a smaller geographical area can often result in lower costs than operating regionally or nationally.

• Shop quotes at every renewal. Before your insurance renewal date, take some time to compare quotes from multiple companies to see if you qualify for a lower rate.

Cargo van insurance FAQs