Everything You Need to Know About Commercial Auto Insurance

| October 27, 2022

The importance of Auto insurance can’t be overstated. Insurance protects you in the event of an accident or collision and can give you peace of mind while on the road. While most people are aware of the basic ins and outs of personal vehicle insurance, you may not be aware of the differences between Commercial Auto insurance and Personal Auto insurance. 

Commercial Car Insurance: What Is It?

A Commercial Auto insurance policy provides liability and physical damage coverage for claims that are not covered by a Personal Auto insurance policy. This type of insurance covers losses involving vehicles used for business-related activities, such as sales calls, deliveries, driving to and from job sites, etc.

What’s the Difference Between Personal and Commercial Auto Insurance?

Commercial Auto insurance covers losses arising from business use of a vehicle. Personal Auto insurance is not intended to cover business related use, and could exclude claims for any business use.

Why Is Commercial Auto Insurance Necessary?

Commercial Auto insurance is intended to cover losses involving vehicles used for business purposes. This includes not only fleet vehicles or rental cars, but any vehicle used for a commercial purpose. The business owner’s personal vehicle, for instance, may fall under this category. An employee’s vehicle may also need to be covered under a commercial policy if they use it for deliveries, whether regularly or not.

Additionally, you can face severe penalties if you don't have commercial auto insurance. If you receive a ticket for operating a vehicle without insurance, you risk receiving a more than $350 fine, having your car towed, and having your insurance rates increase. If you repeat the offense, the state may suspend your license for a maximum of four years and raise the fine to $1,800.

A Commercial Auto policy can cover situations where it is necessary to use a vehicle for business purposes, which may otherwise be excluded from a Personal Auto policy..

When Do I Need a Commercial Vehicle Policy?

You may think that only business owners need to worry about commercial vehicle insurance, but the truth is a little more complicated than that. Here are just a few scenarios where commercial vehicle insurance may be required:

  • You manage a home-based business or are self-employed
  • You have employees who frequently use your personal vehicle
  • You often use your own vehicle for business purposes
  • You work for a ridesharing organization
  • You use the car set aside for commercial activities for your personal use as well

If you’re not sure if your vehicle usage falls within these parameters, talk with your insurance agent to get an idea of what you do or do not need.

How Does Commercial Auto Insurance Work?

The liability limits for commercial vehicle insurance in the state of California are as follows:

  • $15,000 in bodily injury liability or death liability per person
  • $30,000 in bodily injury liability or death liability to more than one person
  • $5,000 in property damage per accident

Higher limits are strongly recommended as state minimums limits do not provide much coverage in the event of an accident.

Depending on the kind of vehicle and how it is operated, semi-trucks and other vehicles with a U.S. Department of Transportation of California serial numbers will be subject to additional liability coverage requirements.

Check your USDOT number or docket number with the Federal Motor Carrier Safety Administration to see if your business needs to meet these extra standards.

What Else Can Be Covered Under a Commercial Vehicle Policy?

While all commercial vehicles need to be covered under the above-stated liability limits at a minimum, there are more commercial auto coverage options available that can extend greater protection. The liability coverage only protects you in the event of an at-fault accident, but not against an incident caused by someone else. That’s where supplemental coverage comes in.

  • When driving a work vehicle, uninsured/underinsured motorist coverage protects you against property damage and bodily injury in the event that the individual who caused the accident is unable to pay for all associated costs.
  • Bobtail coverage is advised when using tractors without a trailer. Normally, it offers protection for the insured truck at all times, including when used for personal purposes.
  • Regardless of who was at fault, Collision coverage helps cover the expense of repairing or replacing your vehicle if it is damaged in an accident.
  • Equipment and supplies that are damaged during transit, loading, or unloading are covered by Cargo coverage.
  • Comprehensive coverage pays for non-collision damages including vandalism, theft, water, or fire.
  • Regardless of who is at fault, medical payments coverage covers costs incurred by drivers and passengers in a company-owned vehicle.
  • Towing and labor coverage pays for roadside assistance for company-owned vehicles.

How Much Does Commercial Auto Insurance Cost?

Californians pay an average of $142 per month for commercial vehicle insurance. As with any insurance, however, costs are based on a number of factors. Some of the components that are taken into consideration are the number of vehicles, the types and values of those vehicles, the level of risk involved, the insured’s claim history, the driving records of the relevant employees, and the policy limits and deductible. 

The policy for a rental car company, for example, will look much different from the policy of a small business that does occasional deliveries. Your insurance advisor will be able to tell you more about your options and can help you figure out how much insurance coverage you require for your commercial vehicles.

Final Thoughts

Commercial Auto insurance helps to protect you and your business in the event of an accident or other vehicle-related damages. Additional coverage can protect you in a number of situations, which can give you peace of mind. 

When you’re ready to learn more about commercial vehicle insurance, get in touch with DiNicola Insurance Services! Our team of experts can help you get a policy that’s right for your business and make sure you’re not over or underinsured. Contact us today to get started