Commercial Auto Insurance Guide for Business Owners

Graphic depicting documentation and a car icon that reads "commercial auto insurance"

Imagine this: You’ve just fulfilled a lifelong dream of owning your own food truck. One morning, you’re driving to your usual spot when another car runs a red light and smashes into the back of your truck. Your bumper is crushed and your stove is damaged when it’s jostled out of place. Then, to make matters worse, when you go to exchange information with the driver of the car that hit you, you find out he doesn’t have insurance. 

Is this the end of your food truck dream? No, not if you have commercial auto insurance, which will cover your food truck or any other commercial vehicle you may have.

What is commercial automobile insurance?

Commercial automobile insurance is an insurance policy that covers the cost of damages to a specialized work vehicle, as well as related legal bills and medical expenses. Vehicles covered by commercial auto insurance include food trucks, delivery trucks, semitrucks, and any other vehicles that are owned or leased specifically for business purposes.

When do businesses need commercial auto insurance?

Not all companies need commercial auto insurance because not all companies use vehicles in the course of business. However, if your company does own a vehicle, commercial auto insurance is a good idea. 

It’s also generally against the law to have a vehicle without insurance, regardless of whether it’s for personal or professional use. In fact, every state except for New Hampshire and Virginia requires auto insurance (though both states have financial thresholds you need to meet should you choose to not carry auto insurance). Federal law also states that any business that moves people or goods across state lines in a business capacity is required to carry commercial auto coverage. So if you live anywhere other than those two states and you have a business-owned vehicle, make sure it’s insured if you want to stay on the right side of the law. 

What does commercial auto insurance cover?

  • Collision damage
  • Theft
  • Medical expenses from collision damage
  • Negligence of another uninsured driver
  • Comprehensive physical damage 
  • Liability

Commercial auto insurance is specifically for specialized business vehicles, like those used in construction, semitrucks, or food trucks. That’s in contrast to business vehicle insurance, which is more for company cars or vehicles used occasionally, for example, but not as the main source of income for your business. 

Types of commercial auto insurance coverage include: 

Collision damage

Collision damage coverage covers any costs related to your vehicle hitting another vehicle or vice versa.


Your semitruck is T-boned by a car running a red light. The other driver is clearly at fault. Your commercial car insurance policy includes collision damage, so the cost of repairing the truck is covered.


Not all policies cover theft, but comprehensive coverage will reimburse you for the value of your vehicle if it’s stolen.


Your construction company leaves vehicles on the job site overnight. One morning you come in and see that someone stole your dump truck. Your comprehensive coverage reimburses you for the value of the truck. 

Medical expenses from collision damage

If the driver or passengers in a work vehicle are hurt in an accident and need medical help, your insurance should help cover medical expenses. This type of coverage usually applies regardless of who was responsible for the accident. 


You’re driving your food truck home late at night after a music festival. You’re tired and start to drift asleep, hitting a guardrail and banging your head against the windshield. The injury requires a trip to the emergency room, which is covered by your insurance.

Negligence of another uninsured driver

Not all drivers are insured, so many commercial auto policies cover costs if you’re in an accident and the other driver is at fault but doesn’t have insurance.


You’re an electrician and your truck is full of equipment. On the way to a job site, you get sideswiped by another car. The other driver didn’t realize their insurance had lapsed and they can’t afford to pay for the damage, but your commercial auto insurance has it covered.

Comprehensive physical damage 

Sometimes work vehicles are damaged without getting into an accident at all. Comprehensive physical damage coverage includes property damage from weather and non-auto-related incidents like vandalism.


Your bread delivery truck is parked on the street and a local graffiti crew tags it up. Even though the truck wasn’t being used for work at the time of the incident, your commercial auto insurance will pay to have it repainted.


If you or an employee get into an accident in a work vehicle, the other driver could sue your business. Commercial auto liability insurance protects you and your company’s assets.


The delivery guy for your high-end baked goods company rear-ends someone on the highway. The driver of that car suffers from whiplash and a broken clavicle as a result. They sue your company for damages, but you don’t have to pay for it out of pocket because your commercial auto liability insurance covers it.

What is the difference between commercial auto insurance vs. personal auto insurance?

Commercial use and personal use of a vehicle have very different parameters—and the difference in price point for the two reflects that. Commercial vehicles are generally driven more—and further—than personal vehicles, which means they’re at a higher risk of damage and accidents. As a result, commercial insurance usually costs more than personal insurance. They also often cover more situations than personal insurance. 

Personal insurance, on the other hand, is generally less expensive and less extensive than commercial insurance. It only covers driving to and from work, as well as any other non-work-related driving.

Some businesses also allow employees to use personal vehicles for work-related tasks. Those cars are not covered under a commercial auto policy, so if your business falls under that category, look into hired and non-owned auto (HNOA) insurance for extra coverage. HNOA insurance also covers any leased or rented vehicles your company uses for work purposes.

Commercial auto insurance FAQ

What is covered under a commercial auto policy?

Policies vary based on needs and price point, but commercial auto policies generally will cover liability, medical expenses, damages, collision damage, theft, and negligence of an uninsured driver.

What is not covered under a commercial auto policy?

Personal vehicles—even if used for business—are not covered under a commercial auto policy.

What is the difference between business and commercial auto insurance?

Commercial car insurance covers specialized vehicles your company needs to conduct business. Business auto insurance covers cars and standard vehicles driven in the course of business like, for example, a company car used for service calls to a customer’s house.