Commercial Auto Insurance:
Definition, FAQ and More

Commercial Auto Insurance Definition

Commercial auto insurance is a policy that covers vehicles owned by or used in a business.


How Does Commercial Auto Insurance Work?

It safeguards businesses against liability for damages or injuries as the result of an accident involving a fleet driver. The policy covers repair of fleet vehicles and injuries to drivers employed by a company, as well as those suffered by another party.



What Does Commercial Auto Insurance Cover?

Commercial auto insurance includes liability coverage (bodily injury and property damage), to cover any injuries, fatalities, or property damage caused by an accident, and in some cases, it covers related legal fees. Payments for medical expenses, like in no-fault accidents, is also covered to help cover fleets drivers or the drivers or passengers of the other vehicle. These policies also typically include uninsured motorist coverage for injuries and vehicle damage caused by an uninsured driver or in instances of hit-and-run accidents. Coverage can also protect underinsured drivers if the at-fault driver’s policy cannot pay all the expenses to fleet vehicles or drivers. In many cases, these policies also include comprehensive and collision coverage for vehicle damage caused by theft, vandalism, flood, or fire.


How Much is Commercial Auto Insurance?

Commercial auto insurance is typically more expensive than personal auto insurance. The monthly premiums are also affected by several different factors, including the year and make of the vehicle, the location of the fleet, driving records of fleet drivers, what the vehicles are being used for, and the coverage options that are chosen. On average, fleets are paying monthly premiums of $142 per vehicle for policies a $1 million coverage limit.


How To Lower Commercial Auto Insurance Costs

It is best to contact your insurance providers to get specific ways in which you can reduce your monthly premiums, but there are certainly some general ways to keep your insurance costs down. Reducing the number of accidents can obviously help lower costs, which is why fleets need to ensure their drivers are employing safe driving behaviors when they are on the clock. This can be done with training that includes mandatory pre-trip vehicle inspections and keeping a close watch on driver records — what they do in their personal time can also affect your insurance costs. The addition of certain technologies, such as rear- and forward-facing cameras, does always automatically lower premiums, but they can reduce accidents, which lowers risk and costs.


Benefits of Commercial Auto Insurance

An accident can not only affect your business, but it can also lead to bankruptcy if your vehicles and your team are not properly covered. Commercial auto insurance not only covers damages and injuries from the accidents, your insurance provider also helps determine fault in accidents and can cover legal costs associated with resulting lawsuits.


Commercial Auto Insurance Problems and Coverage Issues

The recent surge of nuclear verdicts has caused commercial vehicle fleets to close their doors for good. According to the American Transportation Research Institute ATRI), nuclear verdicts average between $406,386 and $449,792. In some extreme cases, these settlements are ranging from $58 million to more than $150 million. These cases have caused premiums to increase for fleets, as ATRI found that insurance premium per mile costs have jumped 47% during that last decade, from 5.9 cents to 8.7 cents per mile.