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What Are Commercial Insurance Requirements?

Nobody can predict when an accident will happen. That’s why companies need commercial auto insurance! So if you own a business that relies on vehicles to get the job done, don’t get left out to dry. Learn about commercial auto insurance so you can protect yourself and your company. 

What Is Commercial Auto Insurance?

Commercial auto insurance policies are insurance policies that apply to vehicles used for business activities. They protect your business against liability for damage from auto accidents. 

How Does Commercial Auto Insurance Work?

Commercial insurance is a specific grouping of auto insurance policies developed to provide compensation to businesses from costs associated with auto accidents. 

Who Needs Commercial Auto Insurance?

Any company that uses vehicles to conduct its business needs commercial auto insurance. You need commercial auto insurance for any vehicles that are:

  • Used for business 
  • Carrying a commercial license plate or tag
  • Registered commercial
  • Owned by a partnership, LLC, or corporation
  • Used to transport people or goods for a fee
  • Operated by employees

Is Commercial Auto Insurance Mandatory?

If you own, lease, hire or use vehicles for your business, you need to carry at least liability coverage. In fact, it’s mandatory in most states, and companies that move goods or people across state lines are required by federal law to have it. 

It’s also highly recommended that businesses purchase commercial vehicle insurance that covers damage caused to them, either from a collision or otherwise. Commercial auto insurance companies can help insure you and your fleet with the proper coverage for your business. 

What Is the Difference Between Commercial and Personal Auto Insurance? 

While both commercial and personal auto insurance cover liability and damages for vehicles, personal auto policies typically only cover one person driving their own car. Meanwhile, commercial auto insurance policies cover businesses. Therefore, commercial fleets need to be covered by a comprehensive commercial policy.

What Is Included in Commercial Auto Insurance?

There are many types of coverage available for commercial vehicle insurance. Common coverages include:

Bodily Injury Liability Coverage

Bodily liability, also called primary liability, is essential coverage that provides payment in the case of injury or death as a result of an accident for which you’re at fault. This coverage is mandated by federal law for all drivers and may cover legal fees depending on the purchased policy.

Property Damage Liability Coverage

Property damage liability is another mandatory type of insurance coverage for all drivers. Often categorized under general liability, property damage liability covers damage to another person’s vehicle or property in case of an accident.

Medical Payments, No-Fault, or Personal Injury Coverage

Personal injury coverage, also called medical payment or no-fault coverage, usually provides compensation for medical costs for the driver and passengers in the event of an accident regardless of fault. 

Uninsured Motorist Coverage

Uninsured motorist coverage covers medical expenses and sometimes property damage costs caused by a hit-and-run or uninsured driver. Underinsured motorist coverage is similar in that it covers costs caused by an at-fault driver without adequate insurance coverage. 

Comprehensive Physical Damage Coverage

Comprehensive physical damage coverage covers vehicles or trailers that sustain non-collision-related damage. Some comprehensive physical damage coverage examples include damage caused by fire, flood, theft, and vandalism.

Collision Coverage

Collision coverage pays for damages to vehicles or trailers caused by an accident or collision.

Example of Commercial Insurance

Let’s say you own a small trucking company and have a driver who gets in an accident. While backing out into traffic, another driver was coming down the street, and your employee didn’t see them. So it was determined that the accident was your employee’s fault.

Luckily, you have a comprehensive commercial truck insurance policy for just this reason. Your property damage liability coverage will cover the costs of repairing the other driver’s car. Unfortunately, the other driver was also injured in the accident, so your bodily injury liability coverage will kick in.

Your driver also sustained some minor injuries – good thing you have personal injury coverage. In addition, there was damage to your trailer, which insurance will cover under collision coverage. After paying your deductibles, your commercial truck insurance will cover your costs, helping you avoid severe personal financial liability. 

Are you a new trucking company looking to protect yourself from situations like this, then check out this useful guide.

Things to Consider with Commercial Auto Insurance Requirements

When purchasing a commercial auto insurance plan, it’s essential to consider a few key factors that affect your business. 

Insurance Agent

Commercial insurance requirements are often more complicated than personal auto insurance. You may have different coverage needs depending on what you’re hauling and where you operate. That’s why choosing a reputable and experienced commercial insurance agent to help you decide on the proper coverage is essential. 

Policy Limits 

When choosing a commercial auto insurance policy, be sure to adequately set and understand the limits for each type of coverage you will have. In addition, you should always know how much your insurance company will pay out to you for any covered claims.

Coverage Needs

Be sure that your commercial auto insurance covers all your needs. Having sufficient coverage for yourself, your trucks, cargo, and employees can protect you from serious legal and financial liability. By only meeting the minimum insurance requirements and focusing on price, you could end up missing essential coverage for your business.


Like personal auto insurance, almost no commercial auto insurance policies will cover 100% of costs. When you make a claim, you have to pay a share out of pocket, called a deductible. Only then will the insurer pay the rest of your claim. Make sure you understand your deductible limit and that you can pay out if necessary. 

Industry Risks

Depending on your company’s industry, you will have different commercial auto insurance needs. For example, trucking companies should also have extra insurance for cargo and trailer interchange if applicable. Owner-operators should have bobtail insurance. Meanwhile, towing companies need on-hook towing insurance. 

Another category of industry-specific insurance is small fleet trucking insurance. With small fleet trucking insurance, you can insure your entire truck fleet under one policy.

Advantages of Commercial Insurance

Having adequate commercial insurance coverage can give you peace of mind that your company won’t be ruined by a single accident. The protection provided by commercial vehicle insurance can help you avoid severe financial strain and hefty lawsuits. 

You will also have liability protection and medical coverage in case of an accident. You can protect your employees, equipment, and company from the unexpected through a comprehensive commercial insurance plan. 

Disadvantages of Commercial Insurance

It’s never a disadvantage to be protected under commercial auto insurance. However, some people find the monthly premiums on the policies to be high.

Get Commercial Auto Insurance That Fits Your Needs

Nobody expects to be in an auto accident while doing their job. Luckily, commercial auto insurance protects you and your company against these unforeseen circumstances. By understanding what insurance coverage you need for your vehicles, you can choose the best coverage for your business. 

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One-Stop-Shop With TAP

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