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Do You Need Commercial Auto Insurance?
By Floyd Arthur
Commercial auto insurance is insurance designed to cover one or more vehicles used for
business purposes, such as a car, van or truck. Commercial auto insurance is generally
required when you use a vehicle to transport people or goods for a fee, or when a vehicle
is driven by one or more employees.
What Does Commercial Auto Insurance Cover?
Although most of us think of commercial vehicles as pickup trucks and big rigs,
commercial auto insurance can cover any type of vehicle that is owned or leased by a
business, including cars, minivans and SUVs. In fact, you can purchase commercial auto
insurance for almost any type of vehicle you use in your firm’s operations, including:
* Vehicles outfitted with work equipment
* Limousines and taxicabs
* Personal vehicles used for transporting passengers for Uber or Lyft
* Flatbeds
* Trucks, such as dump trucks, refrigerator trucks, catering trucks, box trucks and the like
* Rented or leased vehicles
Generally, commercial auto insurance provides the same coverages as individual
insurance with higher limits. Add-ons are available, however, that offer coverage for:
* Equipment, such as that used in loading and unloading goods.
* Employees, including additional employees or people for whom you are doing work.
* Your business, in the event you are sued
As with personal insurance, you can also purchase optional coverages, such as:
* Personal injury protection, which covers medical costs and lost wages if you or your
passengers are injured in an accident
* Uninsured motorist coverage
* Personal effects coverage, which pays to replace or repair damaged items that belong to
you or an employee
How Much Does Commercial Auto Insurance Cost?
Commercial auto insurance rates vary considerably, depending on variables such as the
number of employees you have, the size of your fleet and where in the United States you
are. Ballpark estimates run anywhere from $1,200 to $2,400 for commercial car
insurance, $5,000 to $10,000 for taxi or livery insurance and $2,500-plus for tractor-
trailers nationwide.
Other factors that influence the cost of your commercial auto insurance include your
drivers’ histories, the size and value of the vehicles you own and where and how far you
and your employees drive.
Driver Histories
When your are hiring employees to drive a company vehicle, check their driving record
with the DMV before bringing them on board. Drivers with a good driving record may
lower both your insurance rates and your risks. Additionally, some insurers offer
discounted rates to companies who hire drivers with a commercial driver’s license (CDL).
Fleet Size and Value
As with personal auto insurance, the cost of your commercial auto insurance will
depend on the value of the vehicles you insure. If you own three older model pickup
trucks, for example, the cost to insure them will be considerably less than for a fleet of
10 late-model limousines. If you don’t own the vehicles outright, the lienholder will
require that you have collision coverage on the vehicles as well, increasing the cost.
How Much You Drive
As with personal auto insurance, commercial auto insurance rates are tied to the
number of miles the vehicle(s) are driver each year. More mileage typically equals
higher rates. Vehicles that transport hazardous materials or those that carry passengers
typically cost more to insure as well.
Where You Drive & What You Transport
If your business is involved in transporting goods or passengers across state lines, or you
transport certain types of hazardous materials to a foreign country, intrastate (within a
state) or interstate (across state lines) additional insurance requirements will apply.
These are mandated by the Federal Motor Carrier Safety Administration, and include:
* $750,000 of liability insurance if the vehicle weighs more than 10,001 pounds and
carries nonhazardous materials across state lines
* $5 million of liability insurance if the vehicle weighs less than 10,000 pounds and carries
radioactive materials, explosives, gases in excess of more than 3,500 water gallons, or
any amount of materials that are poisonous by inhalation either intrastate or interstate.
* $5 million of liability insurance for trucks weighing 10,001 or more that carry hazardous
materials in excess of 3,500 gallons, or bulk explosives or materials poisonous by
inhalation either interstate or intrastate.
* $1 million of liability insurance if the vehicle weighs more than 10,001 pounds and
carries hazardous materials other than those listed above, such as oil.
At Carmoon Group, we offer all types of affordable commercial liability insurance,
including coverage for your business automobiles or trucks. Our agents are here every
weekday from 9 a.m. to 6 p.m., so why not call our office at 516-292-3780 to schedule an
appointment today? Too busy to call? Simply request a free consultation online and we’ll
get back to you within one business day.
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