Commercial Auto Liability Insurance: Coverages and Costs
Commercial auto liability insurance protects your business from financial loss after a car accident. You likely need this coverage if you own a business and use vehicles for work.
Certified in financial planning by Boston University
Erin is a writer and journalist specializing in personal finance. With more than five years of experience, Erin has covered topics such as credit cards, mortgages, insurance, and more.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
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As a business owner, you know how important it is to protect what you’ve worked so hard to build. Commercial auto liability insurance is one way to shield you from losses when one of your business vehicles is involved in an accident. As part of a commercial auto insurance policy, it’s required by law.
If you use vehicles in your business, it’s crucial to understand whether you need commercial auto liability insurance, how it can protect you, and how to build a policy that meets your needs.
Quick Facts
Commercial auto liability insurance includes bodily injury and property damage coverage for vehicles your business owns or uses.
Commercial auto liability insurance doesn’t cover your vehicle repairs or your employees’ medical costs following a car accident.
Many insurers recommend businesses carry at least $500,000 to $1 million in coverage.
What is commercial auto liability insurance?
Commercial auto liability insurance protects businesses from liability in at-fault accidents involving their vehicles. Like personal auto liability insurance, commercial auto liability insurance covers bodily injury and property damage to others, and nearly every state requires liability insurance.[1]
Unlike personal auto liability insurance — which covers accidents you cause while driving your personal vehicle — commercial auto liability insurance applies to vehicles a business owns, including cars, trucks, and vans.
Liability insurance is only one component of a typical commercial vehicle insurance policy. A business auto insurance policy can also provide physical damage coverage, which protects the business’ vehicles. It may also include uninsured motorist coverage to help pay for damage an uninsured or underinsured driver causes.
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Who needs commercial auto liability insurance?
You likely need commercial auto liability insurance if you use vehicles as part of your business operations. This includes vehicles your business owns, vehicles your employees own and regularly use for business purposes, and your personal vehicle if you use it for your business.
Commercial auto liability insurance protects your business from financial losses if you or an employee is at fault in a car accident while driving a company vehicle.
A few examples of professionals and businesses that may require commercial auto liability coverage include:
Contractors and tradespeople
Delivery companies
Florists and floral delivery companies
Food service companies, including food trucks
Real estate and sales services
Transportation services
Good to Know
If you use your personal vehicle for business only occasionally, your personal auto insurance policy may provide enough coverage. But if you use your car for business regularly, you’ll likely need a separate business policy. A commercial auto insurance policy is required if the company owns the vehicle.[2]
What commercial auto liability insurance covers
Commercial auto liability insurance covers the following:
Bodily injury liability
Bodily injury liability pays for others’ medical expenses if an employee driving a company vehicle causes an accident.
Property damage liability
Property damage liability pays for damage to another person’s vehicle or property — such as buildings and fences — if an employee driving a company vehicle is at fault.
Legal defense costs
This policy type covers legal defense fees if someone sues your company because of an employee’s actions while driving a company vehicle.
Commercial auto liability insurance can cover most types of business vehicles, including cars, trucks, and vans. This coverage is essential if your business operates a fleet, provides delivery services, or uses vehicles in any capacity.
Nearly every U.S. state requires liability insurance, and failing to have it could result in significant financial losses for your business if you or an employee causes an accident.
What commercial auto liability insurance doesn’t cover
While commercial auto liability insurance helps protect your business, it may not cover everything you need. Here are a couple things it doesn’t cover:
Vehicle damage: No matter what causes your vehicle damage — an accident, bad weather, theft, or anything else — liability insurance won’t pay for repairs.
Your driver’s injuries: Liability insurance won’t cover your driver’s medical expenses — or yours, if you were driving.
Liability insurance covers third-party damages but doesn’t protect your vehicles or pay for your employees’ medical expenses after an accident. A full-coverage policy — which includes comprehensive and collision coverage — helps protect both.[3]
How much commercial auto insurance costs
It’s difficult to pinpoint average commercial auto insurance costs because many factors affect the price. But Progressive data shows monthly costs range from $272 for contractor autos to $954 for for-hire transport trucks. In comparison, The Hartford reports its customers pay an average of $574 per month for commercial auto coverage.
Your commercial auto insurance policy price depends on many different factors, including:
Business type and location
Number of vehicles
Vehicle makes, models, and years
Driving records (for you and any drivers on your policy)
Claims history
Coverage types and limits
Deductibles
If you choose optional coverages or have a higher chance of filing a claim, your insurance costs will increase. Poor driving records, expensive vehicles, low deductibles, and high coverage limits can all contribute to higher premiums.
How much commercial auto liability insurance do you need?
The amount of commercial auto liability insurance coverage you need depends on many factors, but many insurers recommend auto liability insurance amounts of at least $500,000 to $1 million.
You may want higher coverage limits if you have large vehicles that can cause more damage in an accident. If your business transports high-risk materials, more coverage is likely better. The coverage you need also depends on your risk tolerance and finances. If you’re comfortable taking on more risk or can afford higher out-of-pocket costs, you may choose to carry lower policy limits.
If you’re unsure how much commercial liability coverage your business needs, consider consulting an insurance broker or agent. These professionals can help tailor a policy specifically to your business.
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Other coverages in a commercial auto insurance policy
Businesses are legally required to carry liability insurance, but it’s only part of a comprehensive commercial auto insurance policy. Additional coverage options can round out your policy and protect your business.
Medical payments coverage: Covers medical expenses when you or your passengers are injured in an accident, regardless of fault
Rental car coverage: Pays for a rental car when your vehicle is in the shop after a covered incident
Gap insurance: Covers the difference between what you owe on a vehicle and what it’s worth if it’s totaled
Roadside assistance: Covers lockouts, tire changes, fuel delivery, and towing
Hired/non-owned vehicle coverage: Covers vehicles your business uses but doesn’t own, such as employee or rented vehicles
Commercial auto liability insurance FAQs
If you’re considering business auto liability insurance, see the answers to these frequently asked questions to learn more.
If you have personal insurance, do you need commercial auto liability insurance?
If you use your vehicle for business purposes, you likely need a commercial auto liability insurance policy. Your personal car insurance policy typically won’t cover damage that occurs while you’re using the car for business.
Does the law require commercial auto liability insurance?
Nearly every U.S. state requires drivers to have liability insurance. If you use your vehicle for business purposes, you’ll need a commercial policy, as personal auto insurance typically excludes business use.
Why is commercial auto insurance so much more?
Commercial auto insurance policies often have higher liability limits than personal auto policies, meaning they also have higher premiums.
Additionally, businesses may have certain risk factors that make policies more expensive. These include having many vehicles, using large or high-value vehicles that are expensive to replace or more likely to cause damage, covering more drivers, or requiring specialized coverage.
What’s the difference between commercial general liability and commercial auto liability?
Commercial general liability insurance can shield your business from a wide range of claims, while commercial auto liability insurance covers only vehicle-related damages.[4]
For example, if someone slips and falls at your place of business and requires medical care, general liability insurance would cover those expenses. But it wouldn’t cover accidents related to your work vehicles — commercial auto liability would apply.
Erin Gobler is a personal finance writer and journalist based in Madison, Wisconsin. With more than five years of experience, Erin has covered topics such as investing, credit cards, mortgages, insurance, and more. Her work has been featured in major publications like Business Insider, Fox Business, and Time. Erin received her bachelor’s degree from the University of Wisconsin-Oshkosh in 2013, studying journalism and political science. She also received a certificate of financial planning from Boston University in 2022.
Becky Helzer is an editor at Insurify. She loves helping writers express their ideas clearly and authentically. With a diverse background in editing everything from curriculum and books to magazine articles and blog posts, she’s worked on topics ranging from home finance, insurance, and cloud computing to the best tools for home improvement.
A proud graduate of Colorado State University with a degree in technical journalism, Becky lives in Fort Collins, CO, with her husband and their two spoiled rescue dogs.
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