Commercial Auto Insurance Cost: Everything You Need to Know
If you’re running a business that requires vehicles, it’s crucial to budget for commercial auto insurance. Understanding the factors that influence the cost of this insurance will help you prepare for this significant expense. Before getting quotes from commercial auto insurance companies, collect data on the average distance traveled, cargo value, your staff’s driving history, and the types of vehicles you plan to purchase. This will ensure accuracy in the quotes you receive.
Types of Commercial Auto Coverage
Commercial auto coverage provides protection for your business in the event of damage and medical expenses resulting from an auto accident. It consists of two primary types:
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First-party coverage: This covers the cost of damage and medical expenses for your business after an accident. It includes collision coverage, which pays for repairs to your vehicle regardless of fault, and comprehensive coverage, which covers damage caused by incidents other than accidents, such as theft or vandalism.
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Third-party coverage: Also known as liability coverage, this pays for property damage and medical expenses for other parties involved in an accident caused by someone insured under your commercial policy.
Additional types of commercial auto insurance coverage include:
- Non-owner or contract liability: Covers property damage and bodily injury expenses when a covered person causes an accident in a vehicle leased or hired by your company.
- Contract auto physical damage coverage: Covers the cost of damage to a covered rental or contract vehicle in an accident, regardless of fault.
- Medical payments insurance: Pays for the medical bills of your drivers and passengers after an accident, regardless of fault.
- Uninsured or underinsured motorist insurance: Pays for property damage and medical costs if you are in an accident with an uninsured or underinsured driver.
- Roadside assistance coverage: Provides benefits such as towing, gas, tire changes, and other mechanical needs if your crew gets stranded.
Average Cost of Commercial Auto Insurance
The cost of commercial auto insurance varies depending on the type of vehicle. Here are some approximate annual policy costs for different commercial vehicles:
- Standard car used for business: $600 to $2,400.
- Limousine: $4,000 to $10,000.
- Cargo or delivery van: $3,300 to $6,200.
- Taxi: $5,000 to $10,000.
- Semi-truck (owner-operator): $8,000 to $12,500.
These are just average costs, and it’s essential to note that every company’s needs are unique. However, according to a survey by The Hartford, the average premium cost for business auto insurance is around $55 per month or $662 per year.
Factors That Affect the Cost of Commercial Auto Insurance
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Several factors influence how much you pay for commercial auto insurance. Understanding these variables will help you make an informed decision and find the best coverage for your business. Here are some key factors to consider:
- Extent of Coverage: The number of vehicles and drivers you need to cover will impact your policy’s cost.
- Coverage Type: Different coverage types and endorsements affect your overall premium price.
- Amount of Coverage: Higher coverage limits lower the financial risk to your business but result in higher premiums.
- Claims History: A clean claims history will generally result in lower premium costs.
- Value of Your Fleet: Insuring more vehicles or a fleet incurs higher costs. Commercial auto policies often charge a percentage based on the value of the vehicle or fleet.
- Type of Vehicles: The size of your commercial vehicles matters, as larger trucks can cause more damage.
- Driving Distance: Longer distances and interstate trips increase the cost of commercial auto coverage.
- Parking Location: Your premium may be higher if your vehicles are stored in areas prone to vandalism, theft, or crime.
- Deductible: Choosing a higher deductible means lower premium costs but higher out-of-pocket expenses in the event of a claim.
- Type of Cargo: Transporting hazardous materials or high-value items increases your coverage costs.
- Credit History: A poor credit history may result in higher premiums.
- Industry Type: High-risk industries generally pay more for commercial auto insurance.
- Number of Employees: Some insurance companies base commercial rates on the number of employees.
Recommended Commercial Auto Insurance Providers
If you’re looking for reliable commercial auto insurance providers, consider the following options:
- Progressive Business: Offers affordable rates for small business owners. They provide discounts for electronic payments, advance premium payments, and policy packages. Additionally, you can save up to 5% on fleet coverage with their snapshot proview fleet management program.
- Geico: Known for great rates, especially for delivery and rideshare drivers who want personal and business auto coverage from a single company. They also offer comprehensive commercial policies for both individual vehicles and fleets.
- The Hartford: Specializes in policies for professionals who use their vehicles for business purposes. They offer savings on this type of coverage with their Femoral Accident and Impingement Waiver.
Remember, if you use any type of motorized vehicle for work, whether it’s borrowed, leased, or your personal vehicle used for business, you need business auto insurance. It’s crucial to have the right coverage to protect yourself and your business. If you need additional information, resources, or guidance on auto insurance, feel free to check out our sources.
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