Commercial car insurance protects the vehicles that a business owns against liability. Commercial car insurance policies usually help protect a business when its vehicles are involved in an accident. These policies also compensate the company’s employees if they get injured in an accident where they weren’t at fault. Before you decide to purchase commercial car insurance, you may find it helpful to understand what it will cost you.
When Should You Buy Commercial Car Insurance?
Commercial car insurance is required by law in almost every state if you own a business that transports goods or people using a motor vehicle, use your vehicle to provide a service to others, or haul tools or supplies using a trailer to conduct business. Many business owners also need a policy with more extensive liability coverage, due to the nature of their work. There are many types of businesses and vehicles that insurers might exclude from their policy, so it’s important that you check with your current insurer to see what they do and don’t cover.
Typically, commercial insurance policies cover larger work vehicles like box trucks, service utility trucks, and food trucks. However, regular cars and other vehicles may also require a commercial policy if they’re often used for regular business purposes. Business owners often need the particular coverages only available in a commercial car insurance policy. Here are some of the coverages you can expect in a typical policy:
- Property damage liability coverage
- Bodily injury liability coverage
- No fault or personal injury coverage
- Collision coverage
- Comprehensive physical damage coverage
- Uninsured motorist coverage
- Medical payments coverage
How Much Will Commercial Car Insurance Cost?
The cost of a commercial car insurance policy is highly dependent on the insurance provider. You can typically purchase this type of car insurance through an independent insurance agent, who can work closely with you to determine the policy that best suits your business. An insurance agent can also educate you on the coverage provided in the policy you choose and how you can file a claim when an incident occurs. Typically, commercial car insurance costs more than personal insurance, because it insures more vehicles and provides more extensive coverages.
According to insureon, the average cost of commercial car insurance is $142 per month or $1,704 per year for a policy limit of $1 million. Smaller business owners generally pay a little less for insurance, since they have fewer vehicles to insure. The minimum and maximum monthly payment for business owners can also vary significantly, depending on the state or states in which their company operates.
Clients with a commercial car insurance policy may also pay more based on the type of vehicle they own. While businesses that primarily use standard cars in their operations typically pay less than $3,000 annually, limousine and taxi companies often pay up to $10,000 in annual insurance costs. Truck owner-operators might pay even more for commercial insurance on their semi-trucks.
Factors That Affect the Cost of Commercial Car Insurance
Since every company requires personalized commercial car insurance, average costs are likely to vary significantly. The particular type of insurance you choose is likely to have a large impact on your commercial car insurance costs. Depending on your insurer, you may be able to choose between liability coverage or fully comprehensive coverage. Typically, liability coverage is the cheapest option, and it’s the minimum coverage required by law in most states. There are a number of additional factors that have the potential to affect the total cost of your insurance, such as:
- Business size: Generally, larger businesses have higher premiums because they have more vehicles to insure.
- Number of employees: Some insurance providers use the number of people that a business employs to determine the cost of a commercial car insurance policy.
- Number of vehicles: As the number of vehicles that need to be insured rises, the types of coverage available and the cost of it are likely to increase.
- Claims history: Businesses with fewer claims are likely to pay less for their insurance than businesses with an extensive claims history.
- Type of coverage: There are a number of types of coverage available to business owners, depending on their needs, and each might have a different premium.
- Vehicle value: The value of a company’s vehicles is likely to factor into the total cost of insurance, as vehicles that cost more, like semi-trucks, often cost more to insure.
- Type of cargo: Businesses that regularly carry high-value cargo or hazardous materials will likely need to pay more for car insurance than those that don’t.
- Industry risks: Companies in an industry that has lower accident risk may be able to access special insurance discounts.
Ways To Reduce Your Insurance Rates as a Business Owner
Regardless of the industry that you’re in, you can find ways to reduce your commercial insurance rates and save a little more money. One way you can do this is by insuring the vehicles you use for your business together under a single policy, rather than buying separate policies for each one. Bundling them together can also make it easier to access discounts that might be available.
It’s often beneficial to conduct a thorough review of your company’s insurance portfolio and commercial vehicle inventory, as well as the driving history of each employee who regularly operates a motor vehicle as part of their job. Some insurers offer special discounts to companies that remain claim-free for at least a year. If you reduce the size of your business or your operations change, you may want to contact your insurer and let them know about the recent changes to make sure you’re not overpaying for coverage.
Your commercial vehicle liability can also play a major role in how much you can expect to pay each month. If you own several commercial vehicles and want your business to enjoy an additional layer of protection to cover excess liability, you may want to purchase a commercial umbrella insurance policy.
While learning about the cost of commercial car insurance can be overwhelming, hopefully, this guide can shed some light on what you can expect if you decide to purchase this type of insurance. Making the decision to prepay your annual premium and work with an experienced agent may help you save on insurance. Before deciding on a policy, you may find it useful to get multiple quotes from providers, so you compare coverage limits and costs more easily.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
