Commercial Auto Insurance for Small Businesses (2025)
A personal car insurance policy likely won’t cover you when you drive for work. Small businesses and even independent contractors often need commercial auto insurance.
5+ years in auto insurance and personal finance writing
Featured in top personal finance publications
Lindsay is a widely published creator of auto insurance content. She also specializes in real estate, banking, credit cards, and other personal finance topics.
Evelyn PimplaskarEditor-in-Chief, Director of Content
10+ years in insurance and personal finance content
30+ years in media, PR, and content creation
Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.
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If you or your employees drive for business purposes, like delivering food, traveling between clients, or engaging in other business activities, you may need a commercial auto insurance policy. Your personal auto insurance policy may not cover accidents that happen in the course of business, which can leave your company liable for damage and injuries to others.
Because overlap can occur between personal and business use of a vehicle, small businesses have unique auto insurance coverage needs. Your business may have coverage gaps you’re not aware of.
Read on to understand whether your company needs business auto coverage and how to get an auto insurance quote for your small business.
Quick Facts
Nearly every state requires businesses to insure company-owned vehicles with a policy that at least meets the state’s minimum insurance requirements. But most businesses opt for higher liability limits than the law requires.
If you or your employees also drive personal vehicles for business purposes, make sure your policy covers those trips. You may need to add hired and non-owned auto coverage or another endorsement to your policy.
Your personal auto policy may cover the occasional use of your personal vehicle for business, but you should check with your insurance agent.
How to get a commercial auto insurance quote for small business
Commercial auto insurance is a bit different from private insurance for personal vehicles. But the buying process is similar. Here are the steps to get a commercial auto insurance quote for your small business:
Determine your coverage needs. Decide whether you need commercial auto insurance only for vehicles your business owns or if you also need coverage for rented and leased vehicles. You can also buy broader coverage for all vehicles you and your employees use.[1] Determine whether you need physical damage coverage, and choose your liability limits based on the size of your business and your fleet.
Gather important information. Gather your employees’ driver’s license numbers or driving histories, VIN numbers for all vehicles, and information about your business. If you have a current policy, grab your declarations page.
Get quotes online or contact an insurance agent. You can get commercial auto quotes online by visiting insurance company websites or using aninsurance quote-comparison site. Or you can contact an independent insurance agent. Make sure to get multiple quotes for comparison.
Compare premiums and policy features. Aim to get the best value, but know that premiums aren’t the only factor worth considering. Check customer reviews, National Association of Insurance Commissioners complaint ratings, AM Best ratings, claims processes, digital tools, and other perks.
Check your eligibility for discounts. Before picking a policy, consider the discounts each company offers. For example, your small business may be eligible for a discount for tracking your driving or a multi-policy discount forbundling your auto coverage with other types of business insurance.
Buy a commercial auto policy. Choose the policy that best meets your needs. E-sign your policy documents and pay your first insurance premium.
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Do you need commercial auto insurance for your small business?
If your small business owns and operates vehicles, the law in most states requires your business to have commercial auto insurance. New Hampshire is the only exception. If you drive a personal vehicle for business use or if your employees drive their own vehicles to conduct business, the rules are a bit more nuanced.
When you might not need commercial auto insurance
If you have a personal auto insurance policy for your car, your insurer may cover your vehicle for occasional business use, possibly in exchange for a higher premium. This coverage may be enough for a sole proprietor who sometimes drives to meet clients, for example. You should tell your insurance company about your business driving to avoid a claim denial.
When you probably need commercial auto insurance
If you drive your car primarily for business, your personal policy probably won’t provide any coverage, and you’ll likely need a commercial auto insurance policy. If you drive for a rideshare service, including food delivery services, you may be able to add a rideshare endorsement to your personal car insurance policy instead.
When you might need non-owned auto coverage
If your business doesn’t own vehicles, but your employees drive their personal vehicles when working for you, you may need a hired and non-owned auto (HNOA) policy to protect your business from liability. You can also add coverage for non-owned autos to a commercial policy if your business also owns vehicles.
Cost of commercial auto insurance for small business
The cost of a commercial auto policy depends on several factors, like the type and cost of the vehicles your policy covers, your claims history, and the driving records of all drivers. The coverage levels and add-ons you choose will also affect your premium.
For example, Progressive’s average monthly premium for commercial car insurance in 2023 was $257 for contractor autos and $270 for business autos.[2] Meanwhile, small businesses paid about $574 per month for commercial auto coverage from The Hartford.[3] At Next Insurance, 43% of small businesses paid less than $150 per month for commercial auto insurance, and 37% paid more than $200.[4]
The car insurance company you choose and the discounts you’re eligible for will affect your premium, so it’s a good idea to compare quotes and ensure you’re getting the best deal.
What commercial auto insurance covers
Most commercial insurers use a standard business auto coverage form (BACF) to outline the coverages for business vehicles. In each state, every policy must at least meet minimum coverage requirements, but insurance companies typically recommend higher liability limits for businesses.
Unlike personal car insurance policies, the BACF features a combined single limit for bodily injury liability coverage and property damage liability coverage. Insurers typically recommend that even small businesses have at least $500,000 in combined coverage.
A typical business auto policy includes the following coverages for your business vehicles:
Bodily injury liability coverage
This coverage pays for injuries to other people after someone in your company causes an accident while driving for business purposes.
Property damage liability coverage
This pays for damage to other vehicles or structures when someone in your organization causes an accident while driving on company business.
Uninsured/underinsured motorist coverage
Uninsured/underinsured motorist coverage pays for injuries to drivers in your business or damage to your business vehicles if another driver who doesn’t have sufficient auto coverage causes an accident. It also applies to hit-and-run accidents. Not all states require this coverage.
Medical payments or personal injury protection coverage
Most states require medical payments or personal injury protection, which pays for the medical bills that drivers in your organization incur after an accident, no matter which party’s at fault.
Collision coverage
Collision insurance helps pay to repair physical damage or replace your business vehicles if a driver covered under the policy causes an accident in one of your business autos.
Comprehensive coverage
Comprehensive insurance pays for damage to your business vehicles from most non-collision events, like fire or theft. You may also opt for specific perils coverage, which only covers named perils but may cost less.
Optional coverages for commercial auto insurance
Some insurers allow you to add optional coverages to your commercial auto policy. Note that these coverages may have different names depending on the company you choose. Examples include:
Hired and non-owned auto coverage: Provides liability insurance for vehicles your business rents, borrows, or leases, along with personal vehicles you or your employees drive for business purposes.
Hired and non-owned auto physical damage coverage: Adds collision and comprehensive coverage for hired and non-owned autos. Some companies allow you to purchase coverage for hired autos and non-owned autos separately.
Loan and lease gap coverage: Covers the difference between the actual cash valueof the vehicle and the amount you owe your lender or leasing company after theft or damage that totals a vehicle your policy covers.
Rental reimbursement coverage: Helps keep your business running by paying for a rental car while one of your business vehicles is at the repair shop.
Drive another car for named individuals: Covers a named driver when driving any vehicle your business doesn’t own, including personal vehicles.
Roadside assistance: Covers towing, jump-starts, flat tire repair, and other services to help you and your employees get back to work after a breakdown.
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What commercial auto insurance doesn’t cover
Just like personal auto insurance policies, commercial auto policies contain exclusions. For example, a typical commercial auto insurance policy doesn’t cover:
Intentional damage
Accidents due to negligent entrustment, or allowing a driver with a bad driving record to operate your business vehicle
Medical expenses covered under a workers’ compensation policy or unrelated to the accident
Business property your vehicle transports (you may need a business owners policy or inland marine insurance for that)
Accidents that happen while an employee is driving their personal vehicle for business use, unless you have the appropriate endorsements
Types of vehicles commercial auto insurance covers
In addition to company-owned passenger vehicles, commercial auto insurance may cover the following types of vehicles:
Light trucks
SUVs
Work vans
Box trucks
Food trucks
Tractors and trailers
Service utility trucks
How to save on commercial auto insurance for small business
The following money-saving tips may help reduce your commercial auto insurance premium:
Compare quotes from a handful of insurers.
Bundle your commercial auto insurance with your other business insurance coverages or your personal car insurance policy.
Pay your premium in full each year.
Take advantage of the car insurance discounts your commercial insurer offers.
Hire people with good driving records.
Keep your business vehicles in a secure garage.
Self-insure large fleets for physical damage.
Commercial auto insurance for small businesses FAQs
Commercial auto insurance is an important tool to protect your small business from the financial consequences of a car accident. Since commercial car insurance differs in many ways from auto insurance for private vehicles, it’s important to understand what coverages you need.
How is commercial auto insurance different from personal car insurance?
Commercial auto insurance differs from personal car insurance in several ways, including:
Commercial policies typically have higher liability limits.
Personal policies typically protect one or two drivers and one or two vehicles. Commercial policies protect a business that may have multiple vehicles and drivers.
A commercial auto insurance policy typically costs more than personal car insurance.
Do small businesses need commercial auto insurance?
Multiple factors will affect whether your small business needs a commercial auto insurance policy. Generally, if your business owns vehicles that you and your employees use to drive for business purposes, you’ll need a commercial policy.
Is commercial auto insurance cheaper?
Commercial auto insurance is typically more expensive than a personal car insurance policy. Several factors contribute to the greater expense, including higher liability limits, more drivers and vehicles to cover, and the greater risk of an accident that will lead to a claim.
Lindsay Frankel is a content writer specializing in personal finance and auto insurance topics. Her work has been featured in publications such as LendingTree, The Balance, Coverage.com, Bankrate, NextAdvisor, and FinanceBuzz.
Lindsay has been a contributor at Insurify since October 2022.
Evelyn PimplaskarEditor-in-Chief, Director of Content
10+ years in insurance and personal finance content
30+ years in media, PR, and content creation
Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.
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