Whether you operate one company vehicle or none at all, auto risk is hard to avoid. Any time an employee drives for work, like meeting a customer, renting a car at a conference, or transporting equipment, your company may assume liability.

At the same time, modern claims severity, medical inflation, and litigation trends have made auto incidents one of the most financially volatile exposures for growing organizations. Bodily injury claim severity alone rose roughly 9.2 percent from 2023 to 2024, and lawsuits with verdicts exceeding $10 million are becoming more common, significantly raising the stakes of a single crash.

This guide takes a clear, comprehensive look at what Commercial Auto Insurance is, how it works, what it covers and excludes, how much it costs, and how to determine the right limits for your business. It also explains how Commercial Auto Insurance differs from other core policies like General Liability Insurance and Hired and Non-Owned Auto (HNOA) Insurance.

Key Takeaways

• Commercial Auto Insurance protects your business when vehicles owned, rented, or employee-driven are used for work and cause injury or property damage.
• Coverage includes liability, physical damage, UM/UIM, medical payments, and optional endorsements. Exclusions often involve employee injuries, business property in vehicles, and undisclosed uses.
• Pricing varies based on vehicle type, driving patterns, geography, driver history, and coverage structure.
• How much insurance you need depends on your exposure, industry, contracts, and risk tolerance, not just state minimums.
• Hired and Non-Owned Auto Insurance fills critical gaps when employees drive personal or rented vehicles for business.

What Is Commercial Auto Insurance?

Commercial Auto Insurance protects your organization when a vehicle is used for business purposes. It applies whether your company owns vehicles, leases or rents vehicles, or allows employees to drive personal cars for work when paired with Hired and Non-Owned Auto coverage.

Most Commercial Auto policies are built on the Business Auto Coverage Form, an industry standard that uses coverage symbols to define which vehicles are insured. For example, Symbol 1 applies to any auto, Symbol 2 to owned autos, Symbol 8 to hired autos, and Symbol 9 to non-owned autos.

If a vehicle is titled in the business’s name or primarily used for work, a personal auto policy won’t cover it. Likewise, most states require liability insurance on business-owned vehicles, just like they do for personal vehicles. In California, minimum auto liability limits increased in 2025 from 15/30/5 to 30/60/15, reflecting the broader trend of rising claim costs and severity.

Commercial Auto Insurance ensures that when an accident occurs during business operations, your company has financial protection for liability, legal defense, and vehicle repairs instead of absorbing those costs directly.

What Commercial Auto Insurance Covers

A Commercial Auto policy includes several critical protections that together form a complete safety net for business driving.

• Liability Coverage: This is the foundation of Commercial Auto Insurance. It pays for bodily injury or property damage your company is legally responsible for after an auto accident, including legal defense, settlements, and judgments. Liability is often written as a Combined Single Limit rather than split limits, giving you one unified limit per accident. 
• Collision Coverage: Collision coverage pays for damage to your company-owned vehicle resulting from a crash, overturn, or impact with another object. It applies regardless of who is at fault.
• Comprehensive Coverage: Comprehensive coverage applies to non-collision incidents like theft, vandalism, fire, hail, flooding, falling objects, or animal strikes. Pressure on comprehensive claims has increased in recent years due to a nationwide rise in vehicle and catalytic converter thefts, which has driven up both claim frequency and repair costs. Lenders typically require comprehensive and collision coverage for financed vehicles.
• Uninsured and Underinsured Motorist (UM and UIM) Coverage: UM and UIM coverage applies when your business vehicle is hit by someone carrying little or no auto liability insurance. It covers injuries to your employees or passengers and sometimes damage to your vehicle. Many states require insurers to offer this coverage.
• Medical Payments or Personal Injury Protection: Medical Payments coverage pays for medical expenses for occupants of the insured vehicle regardless of fault. In no-fault states, Personal Injury Protection may be required and can also include lost wages.
• Optional Endorsements: Commercial Auto policies can be customized with endorsements such as roadside assistance, rental reimbursement, gap coverage for financed vehicles, and Drive Other Car coverage for executives who do not carry personal auto insurance. These additions help maintain business continuity when a vehicle is damaged, unavailable, or replaced.

What Commercial Auto Insurance Doesn’t Cover

Understanding exclusions is just as important as understanding coverage because exclusions highlight where additional insurance may be required.

• Employee Injuries: Injuries to employees while driving for work are covered by workers’ compensation, not the Commercial Auto policy. Commercial Auto only responds to third-party injury liability.
• Property or Equipment Inside the Vehicle: Tools, laptops, diagnostic equipment, and other business property transported in a vehicle aren’t covered by Commercial Auto Insurance. These items require Business Property or Inland Marine coverage.
• Intentional Acts and Criminal Activity: Intentional damage, fraud, and many forms of gross negligence, including driving under the influence, are excluded.
• Mechanical Breakdown and Wear and Tear: Insurance doesn’t replace routine maintenance. Engine failure, worn components, and aging parts fall outside the scope of coverage.
• Undisclosed or High Risk Uses: If a vehicle is used in ways not disclosed to the insurer, like ridesharing, delivery services, or transporting hazardous materials, coverage may not apply without proper underwriting.
• Pollution and Hazardous Materials: Pollution incidents or hazardous material spills require specialized environmental or trucking-related coverage.

Learn more about what Commercial Auto Insurance does and doesn’t cover.

How Much Commercial Auto Insurance Costs

Commercial Auto premiums vary widely because insurers evaluate a mix of vehicle, driver, operational, and geographic factors. 

In recent years, costs have risen significantly. Accident frequency increased after the pandemic and exceeded pre-2020 levels by 2022 through 2024, while vehicle maintenance and repair costs rose approximately 13% from early 2023 to early 2024. These trends have contributed to sustained rate increases across the market.

Key pricing drivers include:

1. Vehicle type and value. Heavier vehicles, specialty equipment, and newer or higher value models cost more to insure.
2. How and where vehicles are used. Higher mileage, urban driving, and long-distance travel increase exposure.
3. Driver histories. Clean records lower premiums, while violations, distracted driving, or prior accidents increase them. Notably, 64% of companies report concern about liability tied to employee distracted driving, and about one quarter of employees admit to a work-related crash caused by technology distractions.
4. Location and garaging. Claims frequency, theft rates, and legal environments vary significantly by state and city.
5. Coverage limits and deductibles. Higher limits increase premiums, while higher deductibles can reduce cost.
6. Claims history. A strong loss history improves pricing, while repeated claims can drive increases.
7. Safety practices. Driver training, telematics, and documented safety programs can improve underwriting outcomes over time.

There’s no single benchmark price for Commercial Auto Insurance. What matters is understanding your risk drivers and aligning coverage and operations accordingly.

How Much Commercial Auto Insurance You Need

Many businesses carry limits well above state minimums because auto accidents often produce high-severity losses. Determining the right amount of insurance requires evaluating several factors.

• Severity Potential: A single accident can involve multiple injured parties, extensive medical treatment, and high legal costs. Higher limits protect your balance sheet from this volatility.
• Industry and Usage Patterns: Driving frequency and use cases matter more than industry labels. Professional services teams may drive frequently for client meetings, life sciences companies may transport sensitive equipment, and technology companies often rely on distributed teams using personal vehicles.
• Vehicle Size and Passenger Capacity: Larger vehicles or those carrying multiple passengers create higher potential liability.
• Contractual and Regulatory Requirements: Customer contracts, leases, lenders, or regulators may require specific limits or endorsements.
• Umbrella and Excess Liability: Umbrella policies add an extra layer of protection above auto liability limits and scale efficiently as companies grow.

Most growing organizations choose limits that meaningfully exceed state minimums, commonly $1 million Combined Single Limit, paired with Umbrella coverage for added protection.

Learn more about Commercial Auto Insurance limits.

How Commercial Auto Differs from Other Types of Business Insurance

Commercial Auto vs General Liability

General Liability policies exclude auto-related accidents entirely. If a vehicle is involved, the Commercial Auto policy responds.

Commercial Auto vs Hired and Non-Owned Auto

Commercial Auto covers vehicles that the business owns or leases. Hired and Non-Owned Auto covers liability when employees drive personal or rented vehicles for work, and doesn’t cover physical damage to those vehicles. This coverage is essential for companies without owned vehicles or with frequent employee travel.

Commercial Auto vs Workers’ Compensation

These policies can respond to the same incident but cover different losses. Workers’ compensation covers employee injuries sustained while driving for work. Commercial Auto covers third-party injuries, property damage, and liability claims against the business.

Commercial Auto vs Business Property

Commercial Auto protects the vehicle itself, not its contents. Business Property or Inland Marine coverage protects tools, equipment, and other assets transported in the vehicle.

See a full list of other types of business insurance.

Protect Your Business From Driving Exposure

Commercial Auto Insurance is a foundational protection for any company with driving exposure, whether through owned vehicles, rentals, or employee-owned cars used for work. The right coverage helps your business absorb the financial and operational impact of accidents while continuing to meet contractual obligations and grow with confidence.

As driving patterns evolve across hybrid and distributed teams, reviewing auto exposure early and often helps ensure your insurance program keeps pace with your operations and risk profile.

Frequently Asked Questions

Do I need Commercial Auto Insurance if we don’t own any vehicles?

You may. If employees drive personal or rented vehicles for work, Hired and Non-Owned Auto coverage protects your business from liability.

Does Commercial Auto Insurance cover employee injuries?

No. Employee injuries fall under workers’ compensation, not Commercial Auto.

Is equipment inside the vehicle covered?

No. Business equipment requires Business Property Insurance or Inland Marine Insurance.

Does personal auto insurance cover business trips?

Only in limited, incidental cases. Regular business use requires Commercial Auto Insurance or Hired and Non-Owned Auto (HNOA) Insurance.

What if an employee causes an accident during an errand?

If they were driving for business purposes, the company can be held liable. HNOA protects the business from that liability exposure.

How do I choose the right limits?

Consider worst-case accident potential, driving frequency, vehicle types, and contractual requirements. Many organizations use a $1M Combined Single Limit and add Umbrella coverage for higher-risk roles.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.