Car Insurance for Businesses: Commercial Auto Insurance

Commercial auto insurance, or commercial coverage, is insurance providing financial protection for damages relating to a vehicle designated for business use.

  • If you use your vehicle for any business-related purpose besides driving to work, you may need some form of business car insurance as personal policies rarely cover commercial vehicle use.
  • Also business owners should ensure that employees have some type of commercial when driving on the clock. This helps to mitigate the risk of employer liability associated with on-the-job accidents.

Commercial Auto Policies Vs Individual Auto Policies

Commercial policies are similar to personal policies in that they often include many of the same types of insurance.  However, because businesses usually have more assets than individuals, commercial auto insurance typically means much higher liability limits.

If you think that there’s any chance that you need commercial auto insurance, it’s important to consult with an insurance professional (an insurance agent or a broker).  Personal car insurance policies almost always exclude business use of a vehicle from coverage, so don’t just assume you are covered.

In other words, if you or any employee of your business is at fault in a car accident, your company will be responsible for all the expenses that follow.  Without the proper business car insurance, your company will have to pay these costs out of pocket.

Because the total value of a business’ assets is generally much higher than the total value of an individual’s assets, business stand to lose much more than individuals by not being properly insured.

By not getting adequate commercial auto insurance, you risk losing your business.

Who Needs Commercial Auto Insurance?

This is highly dependent on the nature of your business, the specifics of how you use of your vehicle, and the details laid out in both the Exclusions and Definitions sections of your personal car insurance policy’s contract.

If you think that you may need commercial auto insurance, we highly recommend that you consult with an insurance agent or broker.

In general, you need commercial car insurance for any vehicle that your company uses for business purposes, any vehicle that has a commercial license plate or tag, and any vehicle registered as a commercial vehicle.  You must also get business auto coverage if any of your employees will be using vehicles (whether or not those vehicles are owned by the company) in the course of business.

Facts about Commercial Auto Insurance

  • Unlike personal car insurance policies, business auto coverage policies allow you to list anyone that you employ on the list of insured drivers.
  • There are different types of commercial auto coverages.  Some types of business car insurance are “Non-Owned” auto insurance (coverage to the business for any situation in which an employee is using their personal vehicle for company purposes), loading and unloading liability coverage, substitution transportation insurance (to cover the expenses of temporarily replacing your business vehicles when they are being repaired), and Towing and Labor costs coverage.
  • Your commercial auto insurance is tax deductible.  If you’re self-employed, you might be able to deduct your business car insurance premium under your Schedule C.  If you’re an employee (and you do not get reimbursed for mileage or expenses), you can deduct your commercial auto insurance premium on your 2106 (Employee Business Expenses) Form.