Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Commercial transportation insurance is required by state and federal law for any vehicle used in the operation of a business. They serve a variety of purposes including running errands, making deliveries, and/or hauling cargo.

Vehicles can range from a personal car to a big rig. While some vehicles can be insured on a personal auto policy, others require the clauses and language specific to this policy to provide the protection and coverage needed for owners and their businesses.

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Reasons to Buy Commercial Transportation Insurance

commercial transportation

While the cost of the insurance is a concern, it is a necessity. The primary reasons to purchase commercial transportation insurance are:

  1. Financial protection from accidents and lawsuits;
  2. Savings on repairs and replacement costs;
  3. Payment for damages of a 3rd party involved in an accident;
  4. Coverage for the cost of property damage and injuries of a driver hit by an uninsured or underinsured motorist.

This policy provides financial protection from accidents and lawsuits. Without it, a business and its owner exposes themselves to huge financial loss including homes, cars, savings, and the business itself.

There will be substantial savings on repairs and replacement costs in the event of damages to a vehicle resulting from an accident or other unforeseen circumstance. Vehicle costs will be minimized, enabling an owner to keep the business running. Compensation is always sought after an accident. This policy ensures payment for damages when a 3rd party is involved. Protection is provided from further legal action.

Injury and damages aren’t always limited to a 3rd party. The driver and business vehicle may sustain damages and injury from an accident. This policy covers the cost of property damage and injuries of a driver hit by an uninsured or underinsured motorist.

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Having Enough Coverage

In order for a commercial transportation insurance policy to be effective, an owner needs to have the appropriate coverage and have enough coverage.

While only the minimum is required (it varies by state), it is beneficial to have more to better protect against accidents and lawsuits.

Otherwise, a business and its owner can be subject to further legal action, negating the policy’s strength and purpose.

Types of Policies

There are 2 major types of policies available: Auto and fleet. Commercial auto insurance is required when a vehicle is used for more than driving to and from work. Coverage isn’t provided under a personal policy if an accident or damage occurs while being used for business. Here are some tips to spending your auto insurance dollars wisely.

There are 3 classifications for commercial auto insurance:

  1. Private and sporadic business;
  2. Private and business;
  3. And commercial.

Private and sporadic coverage is for a vehicle that is used sporadically for business and isn’t important in creating income for the business. Private and business coverage is for a commonly used vehicle for commercial purposes by a specific driver or drivers. Commercial coverage is when specific drivers use their personal vehicles as part of the daily operation of a business, playing an important role in creating income.reasons to buy commercial car insurance

Commercial fleet insurance provides protection for several vehicles under a single policy. An owner can potentially save thousands of dollars. This policy is typically used by owners of 5 or more vehicles such as taxis, vans, trucks, and/or corporate cars.

Both policies offer a number of insurance options for coverage. They include:

  • Bodily injury liability;
  • Property damage liability;
  • Medical payment or no fault;
  • Uninsured and underinsured motorist;
  • Comprehensive physical damage;
  • And collision.

The auto policy options include family protection and accident benefit coverage. The fleet policy includes combined single limit coverage (CSL). While cost is a concern, all options should be explored. Remember, the type of business and number of vehicles/size of fleet also affect costs and coverage.

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Additional coverage is available that could benefit a business and owner. The most common is breakdown assistance. This provides towing for vehicles when they breakdown or need repair while on the road. Another option is a personal umbrella policy. This protects a business and its owner against libel, slander and large monetary amounts in lawsuits not covered by the original policy. Other notable options include vehicle replacement, legal expenses, prosecution, cargo, and terminal/warehouse coverage.

Helpful Hints Prior to Purchasing Insurance

tips before buying commercial car insurance

When an owner is ready to purchase commercial transportation insurance, there are few things that need to be done. If the following helpful hints are followed, an owner can get the best coverage for his vehicle(s).

Do the research: Utilize the Internet to compare insurance companies. Without regulated pricing, rates are competitive, ensuring coverage can be had at a reasonable cost. The information needed includes the vehicle make, model, and year, the value of vehicle, the VIN, the type of business, the names of drivers and their licenses, and driving histories.

Get online quotes: Shop around and compare prices. Get at least 3 quotes to get the best coverage for the money without skimping on needs, which could be costly. Make sure they are specialists in the business being covered to ensure the proper services and assistance is being provided.

Check out the company prior to purchase: Once a company has been chosen, check it out prior to purchase.

Look at customer reviews. Only use those that come highly rated (8 or higher).

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Worth the Cost

Commercial transportation insurance costs but is a necessity. Research, shop around, and compare prices and companies. The right policy is out there. Don’t be unprepared. If it saves an owner and a business from huge financial and personal loss, it will be worth the cost. Enter your ZIP code and you will receive quotes from multiple car insurance companies for FREE!