Commercial auto insurance
Insurance for vehicles a business owns, leases, hires or has employees drive for work. It can pay the company's covered liability for bodily injury or property damage caused by a covered auto, defend covered claims and, when purchased, pay for covered damage to business vehicles, within the declared limits, symbols and deductibles.
Also called: business auto, business auto coverage form, commercial auto
If a company van, a contractor's pickup or an employee running an errand for the business is involved in a crash, commercial auto insurance is the policy that answers for the business. It pays others for covered injuries and damage up to the limit, pays for a defense, and repairs business vehicles only if physical damage coverage was bought. The business still pays the deductible, anything excluded and any amount above the limit. Ownership, driver and use decide which part applies, according to the NAIC's small business insurance overview (opens in a new tab).
How a claim gets paid, with real numbers
The liability promise in the standard ISO Business Auto Coverage Form, CA 00 01 (opens in a new tab), is to pay the sums an insured legally must pay as damages for bodily injury or property damage caused by an accident and resulting from the ownership, maintenance or use of a covered auto. Take a policy written at New York's statutory minimums under N.Y. Vehicle and Traffic Law § 311 (opens in a new tab): $25,000 per injured person and $10,000 for property damage. One injured person claims $40,000 and the property damage claim is $8,000.
Hover or tap a row to highlight it.
| Claim | Amount claimed | Limit | Insurer pays | Left for the business |
|---|---|---|---|---|
| Bodily injury, one person | $40,000 | $25,000 | $25,000 | $15,000 |
| Property damage | $8,000 | $10,000 | $8,000 | $0 |
| Total | $48,000 | $33,000 | $15,000, plus any uncovered amounts |
These are statutory limits, not a prediction; a $500,000 or $1 million combined single limit could absorb the same covered accident. Physical damage works differently: on an illustrative $12,000 covered repair with a $1,000 collision deductible, the insurer pays $11,000 and the business pays $1,000.
Limits and coverages that change the result
$500,000 and $1 million are common commercial combined single limits, according to the California Department of Insurance's Commercial Insurance Guide (opens in a new tab). Higher limits cost more and leave more available for a covered claim. The main choices on a policy:
- Combined single limit or split limits. A CSL is one amount for the whole accident; split limits cap each injured person, each accident and property damage separately.
- Covered-auto symbols. These numbered codes decide whether owned, hired, borrowed, leased or non-owned autos get each coverage. A vehicle outside the matching symbol sits outside that coverage.
- Collision and comprehensive or specified causes. These pay for damage to the business vehicle, subject to the deductible.
- Hired-auto and non-owned-auto liability. Hired covers qualifying rented or leased autos; non-owned covers the business's liability when employees drive their own cars for work, without paying to repair those cars.
- Uninsured and underinsured motorist, medical payments and personal injury protection, as state law and the policy require. New York requires $50,000 of personal injury protection, according to the New York Department of Financial Services auto FAQ (opens in a new tab).
- Deductibles. A higher physical damage deductible lowers the premium and raises what the business pays on a repair claim.
Interstate for-hire carriers face federal minimums under FMCSA's insurance filing requirements (opens in a new tab), from $750,000 for property carriers with vehicles of at least 10,001 pounds GVWR up to $5 million for some hazardous materials and larger passenger vehicles. Premiums also move with vehicle type, use, territory, drivers and claims history.
Where you see the term
The term shows up on the application, where the insurer asks about vehicles, drivers, use, garaging and mileage; on a binder; and on the declarations page, which lists the named insured, covered vehicles, symbols, limits, deductibles and endorsements. It also appears in endorsements, renewal notices and claim letters. A company that pairs it with general liability insurance can still need the auto policy, because automobile liability is commonly excluded or restricted under a commercial general liability policy.
What Connecticut and New York require
In Connecticut, Conn. Gen. Stat. § 38a-334 (opens in a new tab) requires minimum provisions for liability policies on vehicles with commercial registrations, including bodily injury, property damage and uninsured motorist coverage. Operating a commercially registered vehicle without the security required by § 38a-371 (opens in a new tab) is prohibited under Conn. Gen. Stat. § 14-213b (opens in a new tab). Higher amounts apply under § 14-112 (opens in a new tab), summarized by the Connecticut DMV (opens in a new tab) as $750,000 for non-hazardous freight vehicles of at least 10,001 pounds GVWR, $1 million or $5 million for specified hazardous freight, $1.5 million for vehicles carrying more than 8 passengers and $5 million for 16 or more.
In New York, § 311 sets $25,000 per person and $50,000 per accident for bodily injury and $10,000 for property damage, and no-fault coverage is required on top. When the vehicle is driven in a state or province that requires higher limits, the policy provides those limits, subject to its terms and applicable law, according to the DFS Auto Insurance Resource Center (opens in a new tab).
Questions to ask an agent or insurer
- Which vehicles and uses are covered, and which covered-auto symbols apply to each? Coverage can differ vehicle by vehicle.
- Is the business the named insured, with owners, employees and lessors listed correctly? The NAIC advises naming the business as principal insured when it owns or leases the vehicle.
- What liability limit applies, and is it a CSL or split limits? The limit is the most the insurer pays, and the business may owe damages above it.
- Does the policy include hired-auto, non-owned-auto, physical damage, cargo, uninsured motorist and state-required no-fault coverage? Rented, borrowed or employee-owned vehicles and cargo can need their own coverage.
- What deductible, reporting duties and claim documents apply? Late reporting or a missed policy duty can harm how a claim is handled.
Frequently asked questions
A few follow-up questions come up once the basics are clear.
Is commercial auto insurance the same as personal auto insurance?
No. Both can include liability and physical damage, but commercial auto is built for business ownership, business use and employee drivers, with higher limits common, according to the NAIC. Business use can be excluded or restricted under a personal policy.
Does commercial auto insurance cover an employee's personal car?
Non-owned-auto coverage can protect the business's liability when an employee drives a personal car for work, depending on the policy and endorsement. It generally does not pay to repair the employee's car.
What is the minimum commercial auto insurance required?
There is no single nationwide minimum. State law, vehicle type, passenger or cargo use, interstate operation and federal motor carrier rules each change the required amount. Interstate for-hire household-goods carriers with vehicles of at least 10,001 pounds GVWR also need $5,000 of cargo insurance under FMCSA rules.
Should I report a claim myself or try to settle it?
Report it to the insurer promptly. Policyholders must report claims on time under the contract, and handling a claim personally can be costly, according to the California Department of Insurance.