If you need vehicles for your business, you also need to budget for commercial auto coverage. Reviewing the factors that influence commercial auto insurance cost can help you plan for this often significant expense. Gather data about the average distance traveled, cargo value, driving record of your staff, and types of vehicles you plan to purchase before getting quotes from commercial auto insurance companies.
Types of Commercial Auto Coverage
Commercial auto coverage protects your business from the cost of damage and medical expenses after an auto accident (first-party coverage). It also includes third-party coverage, often called liability, which pays for property damages and medical expenses for other involved parties if someone insured under your commercial policy causes an accident.
Collision coverage, a form of first-party insurance, covers the cost of repairing your commercial vehicle after an accident regardless of fault. The other main first-party policy is comprehensive coverage, which pays for damage to your commercial vehicle or fleet caused by non-accident incidents, such as theft, vandalism, or extreme weather.
Other types of commercial auto insurance coverage include:
- Non-owner or hired liability, which covers third-party property damages and bodily injury expenses when a covered person causes an accident in a vehicle your business hired or rented.
- Hired physical auto damages coverage, which pays the cost of damage to a covered hired or rented vehicle in an accident regardless of fault.
- Medical payments insurance, which pays for medical bills for your drivers and passengers after an accident regardless of fault.
- Uninsured and underinsured motorist insurance, which pays for property damage and medical costs if you have an accident with an uninsured or underinsured driver.
- Roadside assistance coverage pays for towing, gas, tire changes, and other mechanical needs if your staff gets stranded.
Average Commercial Auto Insurance Cost
These are the approximate annual policy costs for various types of commercial vehicles:
- Standard car used for business purposes: $600 to $2400
- Limousine: $4000 to $10,000
- Cargo or delivery van: $3300 to $6200
- Taxi: $5000 to $10,000
- Semi-truck: $8000 to $12,500 for an owner-operator
These averages from Trusted Choice represent the wide range of commercial auto insurance costs.
The Cost Guys gathered data about the maximum and minimum commercial auto insurance policies in each state and reported these average annual ranges:
- California – $574 to $1804
- Florida – $2565 to $3370
- Maine – $486 to $1268
- Michigan – $5282 to $8723
- Minnesota – $983 to $2271
- Montana – $641 to $2525
- Oregon – $1136 to $2205
- Texas – $890 to $2594
Because each company needs a personalized commercial auto insurance solution, it can be difficult to rely on these averages. The Hartford surveyed businesses in eight industries and reported a median premium cost of $55 per month or $662 a year.
Factors Affecting Commercial Auto Insurance Cost
Before seeking quotes, familiarize yourself with the range of variables that change how much you pay for auto insurance:
- The extent of coverage: Finance website The Cost Guys notes that the cost of your policy will rise based on the number of vehicles and drivers you need to cover for your business.
- Type of coverage: You can select from a range of coverage types and endorsements for commercial auto insurance, each of which affects the overall premium price.
- Amount of coverage: The higher your coverage limits, the lower the financial risk for your business. However, more coverage results in higher monthly or quarterly premiums.
- Claims history: If your business has few or no commercial auto insurance claims in the past, you’ll pay less for this type of coverage.
- The value of your fleet: Insuring just one or two commercial vans costs less than insuring a dozen semi-trucks, and your auto insurance rate will obviously vary accordingly. Often, commercial auto policies charge a percentage of the vehicle or fleet value for property damage coverage.
- The type of vehicles: The size of your commercial autos also matters when it comes to insurance costs. Large trucks can cause much more damage than cars used for standard deliveries.
- Driving distance: According to Fit Small Business, you’ll pay more for commercial auto coverage if your drivers travel long distances or make interstate trips.
- Parking location: The place where you store your vehicles factors into your commercial auto premium. The Hartford reports that businesses in high vandalism, auto theft, and crime areas will pay more for coverage.
- Deductible: If your business can afford a higher out-of-pocket deductible in case of a claim, you can access lower premium costs.
- Type of cargo: If you haul hazardous materials, you’ll pay more for auto coverage than if you haul innocuous items. The same goes for hauling high-value items as opposed to less expensive goods.
- Credit history: You may pay more for commercial auto insurance if your business has a poor credit history.
- Type of industry: Companies in high-risk industries pay more for auto insurance than those in industries associated with a lower auto accident risk.
- The number of employees: Many auto insurance companies quote commercial rates based on how many people you have on your payroll.
Recommended Commercial Auto Insurance Providers
Progressive Commercial offers affordable rates for small business owners. If you fall into this category, you can access discounts for electronic payments, upfront premium payments, and policy bundling. You can also save up to 5% of fleet coverage with the Snapshot Proview fleet management program.
Experts say GEICO provides great rates for delivery and rideshare drivers who want a single company for both commercial and personal auto coverage. They also offer full commercial policies for single vehicles and fleets.
The Hartford specializes in policies for professionals who use their vehicles for business. You can save on this type of coverage with accident and fender bender forgiveness.
You need commercial business insurance if you use any type of motor vehicle for work. You should even purchase coverage if you borrow, rent, or hire vehicles for commercial purposes or use your personal vehicle for business purposes (as a rideshare driver, for example).
Check this out if you need additional information, resources, or guidance on car insurance.
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