Commercial Auto Insurance

What Does Commercial Auto Insurance Mean?

Commercial auto insurance is a policy designed for vehicles used for business purposes rather than personal use. It may cover trucks used by companies, a fleet of taxicabs, or even a car typically driven for business activities. This type of insurance is generally more expensive than standard car insurance. Businesses that operate trucks specifically can look at commercial trucking insurance, which is a more specialized form of coverage built around higher weight classes and longer routes.

It is also referred to as a business automobile policy.

Insuranceopedia Explains Commercial Auto Insurance

A business that requires a vehicle for its operations needs commercial auto insurance instead of a standard motorist policy, even though the premiums are higher. This is because the mileage driven for business purposes is often significantly greater than that of a personal vehicle, which increases the risk. If you’re not sure whether your situation calls for a personal or commercial auto policy, it usually comes down to how the vehicle is used and who owns it, not just what kind of vehicle it is.

While the coverage may seem similar to personal auto insurance, as it also covers damage, injury, and liability, the business nature of the vehicle is what sets it apart. Claims paid under commercial auto insurance tend to be higher. For example, a commercial vehicle may carry goods or passengers that wouldn’t be fully covered under personal auto insurance, or the payout from a personal policy might not be sufficient to cover the losses in the event of an accident. Commercial auto coverage is one piece of what most companies need, and it’s worth looking at the other types of business insurance that often get bundled with it, like general liability and workers’ compensation.