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Does My Small Business Need Commercial Auto Insurance?

Commercial Auto InsuranceFor some business owners, the type of auto insurance you need is obvious, for others not so much. Most people carry personal insurance coverage for their everyday transportation needs. But when used to support a business, the same hatchback you pick up groceries in could be considered a commercial vehicle.

Why Commercial Auto Insurance 

Insurers calculate their auto insurance rates and coverage based on a number of factors. When it comes to your business’s use of a vehicle, there are a whole new set of factors to consider. Your liability risks are higher operating a vehicle for commercial use. Importantly, you may need coverage options available under commercial auto policies that aren’t available with personal policies. 

If you have a fleet of trucks, it should be obvious that you need commercial coverage. But even seemingly everyday uses of your vehicle can be considered commercial purposes. If you need to make a claim, the type of insurance you carry will make a big difference. This is because personal insurance doesn’t extend to vehicles used commercially. So to avoid having your claim denied, it’s a must to have the right kind of policy.

When You’ll Need Commercial Auto Coverage

Below are some factors that may affect whether you need commercial coverage. If any of these apply to you and your vehicle and you don’t have commercial coverage, call your insurance professional to make sure you get the right protection for your vehicle. 

Pickup and Delivery of Goods

For many very small businesses, pickups and deliveries are a major part of the business. Everything from newspapers to pizza to messenger services rely on delivery. Vehicles used to make the trip need commercial auto insurance.

Moving People Around

Business vehicles used to provide taxi and limo services, Uber and Lyft ride-sharing services, and other livery services all need commercial coverage. Ferrying customers around is very different from carpooling or taking the kids to soccer practice, so you’ll need commercial auto insurance if you do this.

Who Owns or Leases the Vehicle?

Personal vehicles are owned by individuals or families, but business vehicles can be owned by partnerships or corporations. If a company owns the vehicle, it will need to carry commercial coverage. 

Title and Registration

Similarly, if your vehicle is titled or registered under the name of your business, corporation, partnership, or DBA, you’ll need commercial coverage.

Employee Use

If your employees use your business vehicle to do part of their job, that vehicle definitely needs commercial insurance. Even if your employees only need to use the vehicle infrequently or occasionally, commercial coverage is a must. 

Rented Out and Leased Out Vehicles

Vehicles rented out or leased out to third parties present a unique liability risk for insurers, so commercial coverage is a must here as well. 

Vehicle Weight and Load Capacity

Heavy-duty vehicles are generally used for labor-intensive jobs. If your vehicles has a gross vehicle weight over 10,000lbs. or a rated load capacity greater than one ton (2,000lbs.), you may need commercial coverage. That’s because these aren’t your typical cars, so a different type of coverage is needed. 

Modifications and Affixed Equipment

You’ll also need commercial coverage if your vehicle:

  • Is fitted with a snow plow.
  • Has a working bathroom or kitchen.
  • Has an altered suspension, hydraulic lifts, or racing equipment.
  • Has permanently affixed ladder racks or toolboxes that are used for business purposes.

Special Coverage Benefits Available to Businesses

Because commercial vehicles are used so differently from personal vehicles, commercial coverage includes a number of features and benefits not available to the everyday driver. Some common commercial auto insurance options include:

Single-Deductible Options

Your business vehicle is likely more than a way to get from A to B. You may have a trailer or other expensive business equipment in your vehicle. If you have a claim on multiple items, say your truck and custom tool rig, you only have to pay your deductible once with this option.

Non-Owned Vehicle Coverage

You may use a number of vehicles during your business operation and not all of them may be your business’s. This coverage keeps you protected while you and your employees drive other vehicles for work purposes.

Individual Named Coverage

This feature is similar to non-owned vehicle coverage, but for business owners who don’t have employees and only need to insure themselves for the vehicles they don’t own. 

Any Auto Coverage

If your business has a growing vehicle fleet, this coverage will extend to any new cars, trucks, or vans your business buys in addition to your existing fleet. It also applies to any non-owned and hired vehicles your business needs.

Trailer Interchange Insurance

For businesses who use trailers, this option extends coverage to trailers under your operation but not owned by you.

Rental Reimbursement with Downtime

This coverage reimburses you for the cost of renting a temporary replacement vehicle should yours break down on the job. 


Beyond everyday commuting, if you use your car in the course of your business, you may need commercial auto insurance. But policy details and liability factors can vary wildly — a pizza delivery driver and a shipping business would have very different needs.  The best plan is to talk to your insurer. Tell them about how you use your vehicle and ask about what your current policy already covers and where you may need additional coverage to be protected.