Small Business Auto Insurance: Everything You Need To Know

Published on: October 13, 2022
Last Updated: October 13, 2022

Small Business Auto Insurance: Everything You Need To Know

Published on: October 13, 2022
Last Updated: October 13, 2022

As the owner of a modest enterprise, you may be uncertain as to whether or not your company car requires special commercial insurance.

If you run a small business out of your home, you might not think you need commercial auto coverage if you drive your car for work.

However, your personal auto insurance policy might not cover the business use of your vehicle.

Here is the advice you need for your small business auto insurance.

Precisely What Does “Commercial Auto Insurance” Cover?

Commercial car insurance protects your business against financial loss from an accident involving one of its vehicles.

When you’re the boss, having commercial auto coverage is a must. Since mishaps can occur anytime, safeguarding your company’s cars, trucks, vans, and other vehicles on the job should be a top priority. 

Without vehicle insurance, you may incur exorbitant medical expenses after an accident that you cannot afford to pay. Losing your company car could be disastrous if you need it for work-related travel.

Commercial automobile insurance can protect your small company from financial loss should an accident occur. In almost every jurisdiction, commercial car insurance is mandated for company cars.

Only two states, Virginia and New Hampshire do not require it, but drivers in those states are still responsible for any damages they cause.

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Repairs to the company vehicle, medical bills, and legal representation after an accident are all covered by commercial auto insurance.

Various policies will pay for legal fees if one of your employees is involved in an accident and cover vandalism and theft.

However, if your employees frequently use their vehicles for business purposes, you may want to consider purchasing hired and non-owned vehicle insurance in addition to this policy (HNOA).

This policy protects your business from legal action related to using non-owned vehicles. Due to the more significant potential for damage, the limits of commercial auto insurance policies tend to be higher.

However, claims related to personal use, including commuting, are covered by individual affordable auto insurance policies. They typically have lower limits and lower costs.

However, your auto insurance provider may reject your claim if the accident occurred while you were performing work-related duties, so it is advisable to carry commercial insurance in addition to your personal policy.

How Do I Figure Out If I Need Commercial Auto Insurance For My Small Business?

Most insurance companies classify businesses according to their ownership structure (public, private, etc.), legal structure (partnership, sole proprietorship, etc.), and employee count. The categories used in different sectors are also quite different.

You should have low-cost auto insurance if you run a towing service. The same holds if you’re a real estate agent who frequently drives clients around.

But what if you run a small, locally focused retail business run by your family? Although not as black and white, you should have business auto insurance if your vehicle is used to further or promote your business.

When Working From Home, Do I Still Need Auto Insurance?

You might not need commercial vehicle coverage if you never drive for business purposes or leave the house to do so.

However, almost all home-based enterprises make occasional or regular use of a car for company-related transportation. 

You might need special commercial insurance if you use your vehicle for purposes other than daily commuting.

You risk having your car broken into, and your merchandise stolen if you deliver goods, such as cleaning supplies or cosmetics, to customers’ homes while driving around.

Homeowner’s insurance covers contents stolen from a vehicle, but if you don’t have business insurance for your home, you might be out of luck if anything gets stolen. 

Invest in comprehensive commercial auto insurance to safeguard your business vehicle and its contents.

How Do I Handle Employees Who Want To Use My Car?

The risk to a business grows whenever an employee uses a personal vehicle for company business.

Your insurance rates may increase if you sustain an injury while running a work-related errand

Use commercial insurance if the car is registered under the company’s name. Business interruption coverage, which can compensate for lost employee income, is a common feature of commercial auto insurance.

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There Are Members Of The Family Involved. My Children Have Taken Over The Driving Duties

It makes no difference who is behind the wheel. It’s a risky move to use it for professional purposes.

Your son’s transportation business is your livelihood, so if he were to be involved in an accident while transporting goods, it would be devastating on many levels.


The need for commercial cheap car insurance can vary from one small company to the next.

Many business owners believe that it is preferable to pay a slightly higher commercial insurance premium to ensure their company’s continued health and success in the event of an accident. 

Your small company is vulnerable without auto business insurance, whether you have one vehicle or a fleet or drive occasionally or every day.

You’ve put in a lot of time and effort to get where you are now, so it makes sense to safeguard what you’ve built.

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Written by Allison Langstone

Allison produces content for a business SAAS but also contributes to EarthWeb frequently, using her knowledge of both business and technology to bring a unique angle to the site.