Many businesses use various types of vehicles to support their operations. Most use some type of vehicle (food truck, delivery van, passenger vehicle) for supply pickup, product delivery, and business tasks assigned to employees during business hours.
Vehicles used primarily for business purposes need to be insured under a commercial auto policy, even when personally owned by the business owner rather than the business. With the majority of personal auto policies, once a vehicle is designated for business use, it may be excluded from coverage in the policy, leaving the owner subject to significant risk for liability.
Similar to the personal auto policy, the commercial auto policy is a package policy that includes liability coverage as well as physical damage coverage. It differs from personal auto coverage for various reasons that are important to the business use of a vehicle:
One of the most important advantages of the commercial auto policy is the endorsement available to add coverage for vehicles used which are not owned by the company or belong to employees. By electing this endorsement, your business use of rental vehicles or employee-owned vehicles can be covered with the same liability limits that are on the vehicles you own resulting in better protection for your business.
As a package policy, commercial auto insurance offers coverage on a first party and a third party basis:
Depending on the insurer, there are many optional coverages available, which can be added to the policy by endorsement. These endorsements allow the business to tailor their policy according to their industry and individual needs.
The cost for your commercial auto policy depends primarily on the liability limits you select, type of vehicle you are insuring, motor vehicle reports of the drivers being listed, and various coverages you elect to purchase. Typically, a restaurant will use one or two cargo vans for picking up supplies and delivering food. Average costs for commercial auto coverage are $900 - $1,200. Let's see some examples:
Common limits, coverage, and costs with the driver having a clean driving record:
Average insurance cost per vehicle: $750 - $1,200 per year
There are several factors that can drive the $750 rate to the $1,200 rate:
Costs for additional coverage added by endorsement:
Depending on the state where your business vehicle is registered, there are typically laws requiring commercial auto insurance under various circumstances. The main reason a commercial auto policy is required is because personal auto policies do not offer the liability limits required by the state agency.
It’s also important to note that even if your state does not require commercial insurance for vehicles your business uses, a personal auto policy will typically exclude coverage for various uses such as pizza delivery, even when only done on a part-time basis.
Most insurers will allow an owner or employee to use an insured vehicle for personal use if the coverage is requested and proper disclosure is made on the application. The cost for providing coverage for regular personal use is typically an additional $50 per year. In almost every case, the insurance carrier will require every person with access to a business vehicle to be listed as a driver on the policy.
Prices range from $750 to $1,750 and also varies depending on your zipcode: