Commercial Auto Insurance: Coverage, Cost, and What You Should Know in 2025

More than 34 million small businesses operate in the U.S., and many of them rely on vehicles.^[1] Whether you’re a one-person operation that delivers orders to clients or you have a fleet of trucks for hauling equipment, your vehicles are critical tools. Without proper insurance, a single accident could derail and financially devastate your business.

As a business owner, commercial auto insurance is an essential form of coverage. Most states require businesses to have commercial auto liability coverage. But you can also purchase additional coverage to protect your vehicle from damage and theft (and prevent financial losses).

Commercial auto insurance policies can range from $2,640 to $14,400 per year, according to Compare.com data. But how much you pay will depend on your location, industry, vehicle type, and driving record.

Commercial Car Insurance vs. Personal Car Insurance

A personal auto insurance policy is insurance for your own vehicle that you use for things like commuting to work, running errands, or driving your kids to soccer practice. Policies usually exclude incidents that occur while using your vehicle for business purposes. Or, if you have a truck or van solely for work, you’ll need a separate commercial auto policy.^[2]

A commercial auto insurance policy is for vehicles you primarily use for business purposes. Commercial auto policies tend to have higher liability limits than personal auto insurance policies, and they provide coverage if you or your authorized employee drivers are in an accident.

For example: Let’s say you have a business moving furniture, and you own a large box truck. If your employee is driving the vehicle and rear-ends another car, your commercial auto policy would cover the damages to the other driver’s car and their injuries.

Why Commercial Auto Insurance Is Important

If your business uses vehicles — even on an occasional basis — commercial auto insurance is a must. Not only is it a legal requirement in nearly every U.S. state, but it also provides essential financial protection.

Without coverage, your business could be at risk of serious losses if one of your vehicles is involved in an accident. You could be on the hook for bodily injury costs like medical expenses, property damages, legal fees, and other costs in any accident you or your employees cause. Those losses could be financially devastating to a small business.

If your vehicle needs repairs after an accident, is stolen, or damaged in a storm, a commercial auto insurance policy can pay to fix or replace your vehicle.

What Commercial Auto Insurance Covers

The liability portion of your commercial auto policy covers injuries and damages you or your employees cause to other drivers and their passengers. Your policy will also pay to repair or replace your business vehicles if they’re damaged or totaled in a covered event.

As a business owner, you may use a vehicle in many different ways. These are some common business uses of vehicles:

• Delivery companies using vans to deliver goods to customers

• Landscapers or contractors who tow a trailer with a pickup truck to haul equipment to worksites

• Transportation services that pick up and drop off passengers

• Professionals who use their cars to visit clients

Depending on the type of business you have and the vehicles you own, you may need several of the following types of auto insurance to protect your business:

Collision coverage

If you or your employees are in an accident, commercial liability insurance doesn’t provide any coverage for physical damage to your business vehicle. To protect your car, you’ll need collision coverage. Or, if the vehicle is in an accident and the insurance company determines it’s not repairable or too costly to repair, collision insurance will pay to replace the vehicle.

Keep in mind that if you lease or finance your business vehicles, your leasing company or lender will likely require you to have this coverage.^[3]

Comprehensive coverage

Like collision insurance, comprehensive insurance is optional coverage for your vehicle — unless you finance or lease it. It pays to repair or replace your business’s vehicle if it’s damaged outside of a collision. For example, if someone steals your work truck, comprehensive coverage would pay for its replacement.

Uninsured/underinsured motorist coverage

About 15% of U.S. drivers are uninsured.^[4] If you or your employees are in an accident with a driver who’s uninsured or underinsured, you could be on the hook for the repair bills and damages yourself.

That scenario is where uninsured/underinsured motorist protection would step in. If you’re in an accident with another driver who’s at fault but who doesn’t have adequate coverage, your policy would pay to repair your vehicle. It’d also cover your or your employee’s medical expenses.

Medical payments coverage

Medical payments, or personal injury protection (PIP) coverage, pays for the medical expenses of the driver and the passengers of the company vehicle. If you have employees who frequently drive to client sites or transport passengers, this form of coverage prevents you from having to pay huge medical bills on your own.

Towing and labor coverage

Towing and labor coverage, also known as roadside assistance, comes in handy if your work truck or car breaks down or is in an accident.

This type of insurance pays to tow the vehicle to a local repair shop or — for minor issues like a flat tire — offsets the cost of emergency tire replacements. Towing and roadside assistance coverage helps you get back on the road more quickly (and keeps your business running).

Rental vehicle reimbursement

If an accident lands a work vehicle in the shop for days or weeks, you could experience significant work disruptions and delays. If you have rental vehicle reimbursement, your insurance policy will cover some of the cost of a rental car or truck, allowing you to get another vehicle until your work car is repaired.

What commercial auto insurance doesn’t cover

Commercial auto insurance provides significant coverage, but it doesn’t cover everything. These are common exclusions:

• Intentional damage or damage that occurs due to illegal activities

• Damages or injuries that occur while using the vehicle for personal use

• Damages or injuries that occur while an unauthorized driver is behind the wheel

• Vehicle wear and tear

• Loss of income due to business interruptions

• Goods or equipment you transport in a business vehicle

Keep in mind that as a business owner, you’ll likely need other forms of insurance to fully protect your business. Some common coverage types include workers’ compensation, business interruption, general liability, and professional liability insurance.

How Much Does Commercial Auto Insurance Cost?

Commercial vehicle policies vary significantly in cost. Nationally, average policy costs range anywhere from $220 to $1,200 per month, according to Compare.com data.

Here’s a look at average monthly business auto insurance costs by state.

Commercial Auto Rates by State

State	Average Estimate: Low	Average Estimate: High
Alabama	$160	$860
Alaska	$130	$700
Arizona	$190	$1,040
Arkansas	$220	$1,190
California	$260	$1,400
Colorado	$240	$1,310
Connecticut	$350	$1,910
Delaware	$270	$1,500
Florida	$250	$1,370
Georgia	$290	$1,590
Hawaii	$140	$760
Idaho	$130	$720
Illinois	$190	$1,020
Indiana	$160	$860
Iowa	$130	$720
Kansas	$180	$960
Kentucky	$230	$1,270
Louisiana	$260	$1,410
Maine	$170	$910
Maryland	$360	$1,990
Massachusetts	$180	$990
Michigan	$270	$1,470
Minnesota	$210	$1,130
Mississippi	$180	$980
Missouri	$210	$1,170
Montana	$170	$950
Nebraska	$180	$970
Nevada	$310	$1,680
New Hampshire	$120	$630
New Jersey	$250	$1,340
New Mexico	$170	$920
New York	$320	$1,770
North Carolina	$100	$560
North Dakota	$140	$780
Ohio	$140	$780
Oklahoma	$200	$1,110
Oregon	$180	$960
Pennsylvania	$190	$1,030
Rhode Island	$250	$1,360
South Carolina	$290	$1,570
South Dakota	$150	$810
Tennessee	$160	$890
Texas	$260	$1,420
Utah	$180	$1,010
Vermont	$170	$900
Virginia	$220	$1,180
Washington	$200	$1,080
Washington D.C.	$380	$2,050
West Virginia	$180	$960
Wisconsin	$140	$780
Wyoming	$130	$690

Factors that affect commercial auto insurance rates

Many factors affect your rates, including the following:

• Driving records: Just as how you drive affects your personal car insurance coverage, your employees’ driving histories will affect the cost of commercial auto insurance. If your drivers have a history of driving violations or auto accidents, you’ll likely face higher premiums.

• Location: If your business is based in an area with a high cost of living, repairs will be more expensive, and insurance will be pricier. Similarly, insurance companies normally charge higher rates for businesses located in areas that are more densely populated or have higher crime rates, since those businesses may be more likely to file a claim.

• Types of vehicles: The type, age, and model of your vehicle will affect your rates. For example, a small hatchback will typically be much cheaper to insure than a high-end SUV. How you use your business vehicles also affects your insurance costs.

• Coverage options: When you purchase commercial insurance, you can choose coverage limits and the types of insurance you want to add to your policy. Higher coverage limits and multiple add-ons will increase your total cost. Likewise, if you choose a lower deductible, you’ll pay more for business insurance coverage.

• Discounts: Some business owners can reduce their insurance premiums by taking advantage of discount programs. Depending on your business and insurer, you could qualify for multi-policy discounts, paid-in-full discounts, or telematics discounts.

How Much Commercial Auto Insurance Do You Need?

In most states, business owners must maintain commercial auto policies that meet state liability requirements. But those coverage limits can be quite low, so they may not provide enough financial protection for your business. Liability-only policies also don’t provide coverage for you, your vehicles, or your employees, so you may need additional protection.

As a general guideline, experts recommend business owners purchase coverage that provides at least $500,000 in liability coverage.

When deciding how much coverage to buy, consider the following variables: 

• How risky is your business? If your business requires you and your employees to drive long distances regularly in company cars, you’re at a higher risk of being in an accident.

• Who will be driving your company vehicles? If your employee drivers have a history of accidents, moving violations, or car insurance claims, it could cost you more to insure them. Likewise, if you have employees who drive their personal vehicles on company business, you may have a higher risk of liability claims.

• How expensive are your vehicles? If you have expensive vehicles, such as large trucks or luxury passenger vans, an accident could derail your business. Collision and comprehensive insurance would help offset the cost.

• Do you cross state lines? If you have a business that transports goods or passengers across state lines — such as a moving company that hauls furniture from one state to another — you may need additional coverage. The Federal Motor Carrier Safety Administration requires businesses to maintain $300,000–$5 million of coverage, depending on the type of business you operate.^[5]

5 Tips for Getting the Best Commercial Auto Insurance Policy

Commercial auto insurance is generally more expensive than personal car insurance. But it’s critical to your business’s financial health.

To find the best commercial auto policy for your business, follow these tips:

1. Assess your vehicles and risks. Make a list of the vehicles your business uses, and consider any potential risks. For example, if you store your vehicles in a public lot that’s prone to vandalism, you may need added protection.

2. Consider your drivers’ histories. Your drivers’ records can affect your rates, so focus on hiring drivers with clean driving records. It’s also a good idea to encourage or even require employees to complete safe driving courses.

3. Shop around. Rates vary significantly by company, so shop around and request quotes from several commercial car insurance companies.

4. Add coverage options. To protect your business, you may need to add optional forms of coverage, such as rental reimbursement or uninsured/underinsured motorist protection, to your policy.

5. Review your policy annually. Your business will likely change over time. As your business’s operations evolve or expand, you may need to adjust your coverage. It’s a good idea to review your policy (and shop around for fresh commercial auto insurance quotes) at least once a year.

Commercial Auto Insurance FAQs