Is Commercial Auto Insurance Expensive?

Commercial auto insurance is an important part of most business’ insurance protection plans. It provides compensation in case of accidents and damages caused or sustained by the company’s vehicles. Unfortunately, commercial auto insurance doesn’t always come cheap.

On average, businesses pay between $900 and $1,200 a year for commercial auto insurance. This is relatively affordable, but it depends on a variety of factors.

Coverage Limits

The more coverage a business has, the higher premiums they will pay. But having lower coverage limits can leave your business open to paying expenses out of pocket after an accident. 

Keep in mind that some states have minimum insurance requirements for commercial vehicles, especially those that carry passengers or hazardous material. Check your state’s minimum commercial auto insurance requirements and calculate how much coverage your business’ vehicles need.

Location

Along with different requirements, states also differ when it comes to insurance prices. This is in part due to the area’s claims history, regulations and cost of living. Expensive areas may charge more for commercial auto insurance, as claims in that area are likely to cost higher than in other areas.

Size of the Business

Larger businesses that have more employees and vehicles pay more for commercial auto insurance. If multiple employees will be operating vehicles, even if they are sharing vehicles, your company’s commercial auto insurance policy is likely going to cost more.

Driving Records

Unlike personal auto insurance policies, commercial auto insurance usually doesn’t only consider one driving record. Anyone who will be driving the work vehicle(s) may be held liable for damages they cause, and so their driving record may come into play when calculating the cost of your business’ commercial auto insurance policy. It’s critical to vet all drivers and make sure they have clean records before hire.

Credit and Claims History

Finally, your credit score and the claims history of the business can raise or lower your commercial auto insurance rates. Poor credit generally raises rates while good credit can save you a lot of money. You may build credit by paying off loans and debt you or the business may owe.

As with other insurance policies, filing a claim has a chance of raising your rates. A company with a long history of claims will typically pay more for insurance than companies without. To avoid filing a claim that may raise your rates, make sure all drivers are vetted and practice defensive driving.

ALSO READ: What Does a Business Owners Policy Cover?