How Much is Commercial Car Insurance?

Vehicles owned by your business and registered in the business’s name must be covered by commercial auto insurance. Having adequate coverage protects against liability claims, meets legal requirements, and safeguards business assets. The type of commercial car insurance you will need – and its associated cost – can vary based on the type of vehicles you own and what they are used for. In this article, we’ll consider the different types of commercial car insurance, explore the cost of commercial car insurance options, and consider some ways you might lower your commercial car insurance costs.

Types of Commercial Car Insurance

There are several types of commercial car insurance policies, each designed to cover specific risks. Several are familiar because they apply to personal auto policies as well, such as liability, collision, comprehensive coverage, uninsured/underinsured motorist coverage, and personal injury protection. 

Others are less familiar because they’re specific to the commercial side of things, including:

• Hired & Non-Owned Auto Insurance
  Hired auto insurance covers vehicles your business rents or leases. Non-owned auto insurance covers employee-owned vehicles used for business purposes.

• Loading & Unloading Coverage
  Provides coverage for damages occurring during the loading or unloading of goods from your business vehicle.
  
• Cargo Insurance
  Covers the loss or damage to goods transported by your business vehicles, typically used in logistics or trucking industries.

• Fleet Insurance
  Fleet insurance provides coverage for multiple vehicles owned by the same business under a single plan. (Is fleet insurance cheaper? Yes! More on this later.)

How is Commercial Car Insurance Calculated?

Commercial car insurance premiums are calculated based on several factors. Here’s a breakdown of the key elements insurers consider when determining the cost:

Vehicle Factors

• Type of Vehicle: Heavy-duty vehicles like semis, dump trucks, and tow trucks cost more to insure than light-duty vehicles due to their size, weight, and higher risk factors. Specialized vehicles like food trucks, construction vehicles, or ambulances, have tailored policies to address the unique risks of operating such equipment.
  
• Vehicle Value and Age: Newer, high-value vehicles have higher premiums. Older vehicles may cost less unless they require costly repairs or are difficult to replace.
  
• Usage and Mileage: Vehicles used for food delivery, courier services, or parcel delivery may have more frequent stops, increasing the chance of accidents. Trucks and vehicles carrying construction materials or heavy equipment may need coverage that includes tool and equipment insurance to protect from theft or damage. Vehicles used to transport passengers need higher liability limits to protect against potential injury claims. (Rideshare insurance can bridge the gap between personal auto and commercial coverage.) Businesses that use trailers may need separate trailer interchange insurance. 

Driver-Related Factors

• Driver Age and Experience: Younger or inexperienced drivers increase risk, leading to higher premiums.
  
• Driving Records: Businesses with drivers who have clean records pay lower premiums, while those with accidents or traffic violations face higher costs.
  
• Number of Drivers: Multiple drivers or a rotating workforce adds risk since insurers have less control over individual driving habits.

Business Operations & Industry Type

• Nature of Business: Certain industries, such as delivery, construction, and logistics, face more risks and therefore have higher insurance premiums. Passenger transport services (e.g., taxis or shuttle services) also increase liability.
  
• Frequency of Use: Vehicles used daily or for long hours (like delivery trucks) will incur higher premiums than those used occasionally.

Location & Territory

• Business Location: Operating in areas with high traffic, crime rates, or accident frequency increases premiums.
  
• Geographic Range: Local or short-distance driving is considered less risky, leading to lower premiums. Vehicles used for long-distance or interstate driving require policies that reflect the higher risk of accidents, breakdowns, and legal jurisdiction issues across state lines.

Type of Cargo or Products Transported

• Hazardous Materials: Transporting hazardous materials (chemicals, explosives, flammable goods) significantly increases risk and requires specialized insurance, often mandated by federal regulations. These policies must meet minimum financial responsibility requirements, and additional environmental liability coverage may be needed.
  
• High-Value Goods: If transporting high-value items (like jewelry, art, or luxury goods), businesses may need increased cargo coverage to protect against theft, loss, or damage.

• Perishable Goods: Companies transporting perishable items (like food or flowers) need coverage that addresses the risk of spoilage, often through endorsements like refrigeration breakdown coverage.

Claims History

• Previous Claims: Businesses with a history of frequent or severe claims will face higher premiums due to the increased likelihood of future claims.
  
• Loss Ratio: Insurers assess whether the premiums collected from a business cover its claims. High-loss businesses will see higher rates.

How Much is Commercial Car Insurance?

As demonstrated, the cost of commercial car insurance varies widely depending on several factors. One thing is for sure – the cost of personal car insurance is far less than commercial car insurance! 

Type: Small Business Vehicles (cars, vans, pickup trucks)

• Average Range: $1,200 – $3,000 per year per vehicle

• Insight: Used for deliveries, client visits, or contractor work

Type: Delivery Vehicles (food delivery, couriers)

• Average Range: $2,500 – $6,000 per year per vehicle

• Insight: Higher premiums due to frequent driving and increased risk

Type: Heavy-Duty Trucks (dump trucks, box trucks)

• Average Range: $5,000 – $10,000 per year per vehicle

• Insight: Costs rise with the weight of the vehicle and cargo

Type: Long-Haul Trucks (18-wheelers, tractor-trailers)

• Average Range: $8,000 – $15,000 per year or more

• Insight: Interstate operations, high mileage, and large liability limits increase the premium

8 Ways to Lower Commercial Insurance Costs

There are a number of effective ways to reduce the premiums associated with your commercial car insurance policy.

1. Fleet Insurance

Fleet insurance cost savings are typically extended to businesses with five or more vehicles, but can be offered to smaller fleets by some insurers. The benefits of fleet insurance include discounted premiums, simplified management, uniform coverage, flexibility to add or remove vehicles, discounts for tracking driver behavior (telematics), and driver risk management.

2. Increase Deductibles

Opting for higher deductibles reduces the premium. However, businesses must have enough cash flow to cover out-of-pocket costs in the event of a claim.

3. Implement Driver Training Programs

Regular driver education helps improve safety, reduce accidents, and lower the number of claims, resulting in insurance discounts. Defensive driving courses can also lower fleet car insurance costs.

4. Use Telematics & GPS Monitoring 

Track speed, braking, and driving behavior, encouraging safer driving habits. Insurers offer up to 20% discounts for telematics-based policies!

5. Bundle Policies with the Same Insurer

Bundling commercial auto insurance with other policies results in multi-policy discounts.

6. Seasonal Insurance for Infrequent Use

Some insurers offer seasonal coverage options for vehicles used during certain months.

7. Maintain Clean Driver Records

Assigning drivers with clean records to business vehicles reduces premiums. 

8. Regularly Review and Adjust Coverage

Review insurance needs annually to avoid over-insurance. 

Have questions about commercial car insurance? Connect with our team at Independent Insurance Associates – we are here to help you secure the right coverage for your specific needs!