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Return To: Commercial Auto Insurance – The Ultimate Guide
One mistake that small business owners often make is to assume that their personal auto insurance provides coverage for the vehicles they use for their business. Many aren’t aware that once a vehicle has been registered for business use, most personal auto insurance policies won’t cover for the liabilities of a business vehicle, exposing the vehicle owners and their employees to significant risks.
Keep yourself from falling into the same trap by getting commercial auto insurance on top of your personal auto insurance policy. While this may sound like an additional expense, it’s always better to be safe than sorry.
If you’re interested in getting it, continue reading below to know how much commercial auto insurance costs.
What Does Business Auto Insurance Cover?
Before delving into the costs of business auto insurance (also known as commercial auto insurance), you must first be aware of what this type of insurance actually covers. Similar to a personal auto insurance policy, business auto insurance covers physical damages and liability in one specialized package that can be applied on a first-party and third-party basis. Aside from covering vehicles owned by your business, commercial auto insurance also covers rented or borrowed vehicles as well as employees who use their cars for the business.
Covered in business auto insurance are the following:
- Property damage liability: This pays for the repair and replacement of vehicles or other property involved in an accident proven to be caused by your insured driver. Consider getting a higher liability limit since some accidents may involve multiple vehicles or excessive property damage.
- Bodily injury liability: If your employee is proven to be the at-fault driver in an accident, this type of coverage will pay for the third party’s lost wages as well as medical and funeral expenses. This liability will also shoulder defense costs for your employee when the case goes to court.
- Uninsured and underinsured (UM) motorists coverage: If you, your employees, or any of your passengers in a commercial vehicle have been involved in an accident caused by an insured or underinsured driver, UM coverage will pay for the damages. Aside from medical expenses and loss of income, UM coverage may also cover property damage as well as pain and suffering that’s not included in body injury liability.
- Medical payments: Regardless of who’s at fault, this type of coverage pays for the medical expenses you, your employees, and your passengers have incurred as a result of the accident.
- Collision coverage: This pays for the damages your commercial vehicle sustained during an accident, no matter who’s at fault. This applies to when you were hit by another vehicle, you hit another vehicle, an object hits your vehicle or vice versa, or if your vehicle rolls over.
- Comprehensive coverage: Similar to collision coverage, this also pays for damages sustained by your vehicle, but this covers damage caused by theft, vandalism, accidents, extreme weather, and animals. This will also pay for your replacement vehicle if it’s stolen or unrecovered.
- Roadside assistance: In the event your commercial vehicle needs to avail of roadside services such as towing or fuel, this type of coverage saves you the trouble of paying for them.
- Rental reimbursement: This covers a vehicle you’ve rented that became involved in an accident.
Average Cost for Commercial Auto Insurance
In the state of North Carolina, all registered businesses are required by law to provide drivers of business vehicles with continuous liability insurance. This protects you and your employees from damage and injuries that have occurred during work hours.
As a minimum liability limit, North Carolina requires vehicle owners to get the 30/60/25 minimum. Also called the split limit, this policy separates or splits the dollar amounts payable by your insurer into three groups:
- For each person injured in an accident: $30,000
- For all people injured in an accident: $60,000
- For all property damaged in an accident: $25,000
For small businesses, the monthly average cost of commercial auto insurance can range from $50 to $200 for each commercial vehicle that’s insured. Recommended median liability limits can also run between $500,000 to $1 million.
Getting a business auto insurance quote from a reliable insurer can give you an idea of how much you need to pay for the coverage you want.
Average Commercial Auto Insurance Cost Based on Vehicle Type
Businesses are varied and use different vehicles for different purposes, so the costs can be significantly affected by the type of commercial vehicle you want to insure. Here’s a quick rundown of estimated average costs based on vehicle type:
|Commercial Vehicle Type||Average Cost|
|Cargo or Delivery Van||$3,300–$6,200|
Factors That Affect the Cost of Commercial Auto Insurance
Aside from the type of coverage you need, other factors can affect how much you have to pay for your commercial auto insurance. These can include the following:
- Purpose of the vehicle: Pertains to how the vehicle is being used, such as for transportation or deliveries.
- The cost of the vehicle when new: This involves how much is needed to repair the vehicle when it’s damaged.
- Gross vehicle weight: The larger the vehicle, the higher the insurance cost, as it can cause more damage in an accident.
- Route the vehicle takes: Some routes can be more dangerous than others, especially if the vehicle is also used to transport large items.
- Industry or profession: The nature of your business will also affect the costs, as some jobs are riskier than others. For instance, a truck doing long-haul deliveries is more at risk compared to a van that transports employees within the vicinity of an airport.
- Make, model, and year: The vehicle type and its age are taken into account when computing for the appropriate insurance cost.
- Records of drivers: If the driver covered by the policy has been involved in more accidents, it’s more likely that you’d pay a higher premium since they’re considered high-risk.
- Number of vehicles covered: Of course, the more commercial vehicles you want to have covered, the higher the cost.
- History of claims: If you’ve filed numerous claims in the past, the cost of your insurance is also likely to increase.
Cutting Down on Commercial Auto Insurance Premiums
Even though commercial auto insurance is a necessary expense to keep your business covered, there are several ways you can cut down on the payments for premiums. Armed with the right knowledge, you can make the most of your coverage while staying within your budget.
Here are some options you can consider:
- Keep a clean driving record by avoiding accidents.
- Regularly maintain all your commercial vehicles.
- Add GPS tracking that can help monitor safe routes, your vehicle’s current location, and whether the driver is speeding.
- Do a background check on all new employees. If they’ve been involved in multiple driving incidents, DUIs, or DWIs, consider other candidates.
- Raise or adjust deductibles and coverage limits.
- Encourage safe driving practices among employees and maintain a safe driver program.
- Talk to your insurer about available discounts.
Stay Safe—Get Covered
Every year, more than 38,000 people die from crashes on US roadways. An additional 4.4 million suffer from serious injuries as a result of road crashes. These figures are more than enough reason to get commercial auto insurance since you can never be too careful on the road. This way, you can be sure that you and your employees are protected when you get involved in a vehicular accident.