Commercial Auto Insurance for Small Businesses
When your personal auto policy stops covering business driving, what commercial auto insurance covers, and how hired and non-owned auto coverage fits in.
Plenty of small business owners drive for work: to client sites, to markets, to pick up supplies, or to deliver products. Many assume their personal auto policy will cover them. Sometimes it does, but often it doesn't — and finding out after an accident is the worst time to learn the difference.
When personal auto insurance isn't enough
Personal auto policies are written for personal use. Many include limitations or exclusions when a vehicle is used primarily for business. Situations that commonly call for commercial coverage include:
- The vehicle is titled to your business.
- You use it to transport goods, tools or equipment for paid work.
- Employees drive it.
- You carry customers or passengers for a fee.
- It's a specialized vehicle, such as a food truck, box truck or work van with racks.
Rules vary by insurer, so the safest approach is to describe exactly how you use the vehicle and ask whether your current policy covers it.
What commercial auto insurance covers
| Coverage | What it does |
|---|---|
| Liability | Pays for injuries and property damage you cause to others in an accident. States set minimum required amounts. |
| Collision | Covers damage to your vehicle from a collision, regardless of fault, minus your deductible. |
| Comprehensive | Covers non-collision damage such as theft, vandalism, fire or hail. |
| Uninsured/underinsured motorist | Helps when the other driver has no insurance or not enough. |
| Medical payments or PIP | Helps with medical costs for you and passengers, depending on your state. |
Tools and equipment stored in the vehicle are often not covered by the auto policy itself. Contractors and mobile businesses usually protect them with a separate tools and equipment policy, sometimes called inland marine coverage.
Hired and non-owned auto (HNOA) coverage
If your business doesn't own vehicles but employees sometimes drive for work, your business could still be sued after an accident. HNOA coverage is liability protection for the business in those situations, such as an employee driving their own car to the bank or using a rental car on a work trip. It's commonly available as an add-on to a BOP or general liability program. It typically doesn't cover damage to the employee's own vehicle, which remains the job of their personal policy.
What affects commercial auto premiums
- Type, size and value of the vehicles.
- How far and where they are driven.
- Driving records of everyone who drives them.
- What you carry (tools, goods, passengers, hazardous materials).
- Coverage limits and deductibles.
- Your state and garaging location.
Tips for small businesses
- List every driver and check their driving records before letting them drive for work.
- Write a simple vehicle-use policy for employees.
- Consider liability limits above your state minimum; serious accidents can exceed minimums quickly.
- Tell your insurer about changes in vehicle use, new drivers or new vehicles.
Frequently asked questions
Will my personal car insurance cover business use?
It depends on your policy and how you use the vehicle. Occasional business errands may be fine under some personal policies, but regular business use, transporting goods, or carrying tools and equipment for paid work often requires commercial coverage. Ask your insurer directly.
What is hired and non-owned auto insurance?
It is liability coverage for your business when someone drives a vehicle your business doesn't own for work purposes, such as an employee running an errand in their own car or a rented vehicle.
Do food trucks need commercial auto insurance?
Generally yes, because the truck is a vehicle used for business. Many food truck owners also need coverage for the kitchen equipment inside it.