How to Handle a Commercial Auto Policy

Structure your business vehicle insurance to cover liability, collision, and comprehensive while controlling costs through proper coverage limits.

1. Set liability limits above state minimums. Purchase $1M combined single limit or $500K/$1M split limits for bodily injury and property damage. State minimums run $25K-$50K but won't cover a serious accident. Higher limits cost 15-25% more but protect business assets from lawsuits.
2. Choose deductibles based on cash flow. Set collision and comprehensive deductibles at $500-$2,500 depending on your repair fund capacity. Each $500 increase in deductible reduces premiums 8-12%. Match deductibles to what you can pay without disrupting operations.
3. Define covered drivers explicitly. List all employees who drive company vehicles and require valid licenses and clean records. Unlisted drivers void coverage. Add occasional drivers for 5-10% more premium rather than risk a coverage gap during claims.
4. Track vehicle use for accurate pricing. Report actual business use percentage and annual mileage. Commuting adds 15-30% to premiums versus business-only use. Delivery and service calls cost more than office-to-office driving due to higher accident rates.
5. Add hired and non-owned coverage. Purchase $1M hired auto coverage for rental vehicles and non-owned coverage for employee personal vehicles used for business. This costs $200-$500 annually but covers gaps when employees drive their cars for work errands.
6. Review annually and after fleet changes. Audit coverage when adding vehicles, changing drivers, or expanding territories. Rate changes run 5-15% annually. Get quotes from 3 carriers every 2-3 years since commercial auto pricing varies significantly between insurers.