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Insurance

What Is Commercial Auto Insurance?

Those vans you’re using to deliver those delicious gluten-free cupcakes to neighborhood coffee shops aren’t going to insure themselves.

If you own your own business—and that business involves anything with wheels (except bicycles and unicycles maybe)—you need something called commercial auto insurance.

Don’t leave your business’s future at risk. Whether you have a huge fleet or just one van for a small business, accidents happen. And commercial auto insurance is a great defensive strategy to keep your business making money and not losing money.

Let’s learn what it covers so you can get educated about what you need.

What Is Commercial Auto Insurance?

Commercial auto insurance is a type of business insurance (also called commercial insurance) that protects you from having to pay out of pocket for accidents involving your company’s vehicles. It also gives you liability protection from accidents caused by you or an employee. So if you crash your mobile dog-grooming van into someone else’s property, you’re not on the hook.

If you own or use vehicles to run your business, you need commercial auto insurance. Your personal auto insurance policy won’t cover business stuff.

How Commercial Auto Insurance Works

Let’s say you crashed your landscaping truck, and someone got injured. The injured person will typically file a claim with your commercial auto insurance company. Your insurer will review what happened and, if it’s covered under your policy, will cover costs up to the policy limit.

Money Bills

Protect your business and your budget with the right coverage!

If the damages or lawsuit goes above your policy limit, you’ll need to pay that difference (not good). This is why it’s super important to really think about how much you need. And if you’re looking to increase your limits, check out excess liability coverage or umbrella insurance.

What Does Commercial Auto Insurance Cover?

Now that we’ve figured out what commercial auto insurance is, what does it cover?

Here’s some of the bang you get for your buck:

Liability takes care of bodily injury or damage to property if you’re responsible for an accident. So if you crash into someone else’s business storefront, you’re covered. It also helps with legal fees if you’re sued.

Collision covers damage to a company car, truck or van. If you or one of your employees accidentally wrecks your brand-new moving truck, you won’t need to drain your savings to pay for damages.

Comprehensive coverage pays for damage from fire, theft and weather. So at least your finances will be protected if your tow truck gets trapped in a hailstorm. (We’re not sure if asteroids are covered . . . )

Medical bills or loss of income are also covered for people injured in an accident inside a company vehicle.

Rental reimbursement will pay for a rental car while your vehicle is in the shop after a covered event.

Do You Need Commercial Auto Insurance?

If you use any type of car, truck or van for your business, you need commercial auto insurance. It’s just smart. Because the last thing you want is to worry about how you’re going to replace a key vehicle after an accident. You still need it even if you’re a small business owner and just have one vehicle. If you’re using it for business stuff, you should get higher levels of coverage with commercial insurance.

If you’re still on the fence about it, here are a couple instances when you might be required to have it:

  • If your business transports things between states
  • If you have bigger vehicles (think semis), you might be required to have commercial truck insurance coverage.

You should also ask: Do I or any of my employees use vehicles for things like sales calls, business errands, or airport runs for business partners? If so, you need coverage.

What’s the Best Way to Buy Commercial Auto Insurance?

It can be tricky to know exactly what you need when it comes to business insurance. Plus, you’re focused on running a business—your bottom line, hiring, sales, market trends, and the list goes on. Who has time to shop around for commercial auto insurance?

That’s why we created our Endorsed Local Providers (ELP) program. It’s a network of insurance agents who we’ve vetted to make sure you have somewhere you can go to find the best coverage.

And our agents are RamseyTrusted, which means they have the heart of a teacher and can explain what you’re paying for.

Don’t wait. The peace of mind alone will be worth it. Check this off your to-do list so you can get back to the stuff only you can do.

Connect with an ELP today!

Frequently Asked Questions

Will I be covered if I use business vehicles for personal use?

Yes, personal use is usually covered for business vehicles. But family members won’t have the same levels of coverage. Check with your agent and they can walk you through what you need.

How much is commercial auto insurance?

The cost of commercial auto insurance varies widely. Some of the factors that affect your premium include where you live, how big your deductible is, the industry you’re in, how many employees you have, your business history, and how many claims you’ve filed.

Can I deduct commercial auto insurance premiums from my taxes?

You can sometimes deduct commercial auto insurance premiums from your taxes, but your insurance agent will be able to look at your unique situation.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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