Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 18, 2020

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Key takeaways...

  • Most businesses that use vehicles for business driving will need to purchase some sort of business insurance
  • The majority of insurance providers will give you a discount if you combine your car policy with your business owner’s policy or general liability policy
  • Because the insurance requirements vary from state to state, you need to make sure you are covered even if you get in an accident in another location
  • Some policies will need coverage for only the vehicle and drivers involved, while others will need coverage for the items being delivered and transported. These will all affect your rate.

If you are a small business owner who only has one vehicle and it is not used extensively, you should expect your business car insurance rates to be similar to your personal car insurance rates, which average between $1,600 and $2,200 nationally.

If your business car insurance needs are more complicated, your rates will obviously be much higher. Get an idea of car insurance rates by entering your ZIP code into the FREE  quote tool above!

Most businesses that use vehicles for business driving will need to purchase some sort of business insurance. The cost of this coverage will vary greatly, even more than personal car insurance varies.

There are many factors that go into figuring out rates for business car insurance so looking at the average won’t do much to help you, as your business needs may be a lot different.

Table of Contents

Types of Business Car Insurance Coverage

One of the biggest determinants of business car insurance rates is what type of coverage you choose to carry. As with personal auto insurance, the less coverage you carry the less you will pay for your premium.

The National Association of Insurance Commissioners will guide you to what the minimum coverage in your state is, when you use the handy map on their website.

In most states, this will be a liability for bodily injury and property damage, up to a certain limit defined by each state. The rates for this coverage will land on the lower scale for insurance rates.

The majority of businesses choose to have more coverage than just liability and this is what can increase insurance rates dramatically. Besides the basic coverage types that personal auto policies offer, business car insurance policies may require additional options.

Non-owner’s vehicle coverage is important if you have employees that drive for business purposes but use their own cars.

They may be making deliveries or just doing errands for you. This type of coverage will cover them under your business policy and afford them the same protection for damages caused.

The Insurance Information Institute can provide more information about car insurance for your business such as whether you need to have it and what the coverage options mean.

Insurance needs become more entangled, complicated, and expensive if you own a business that transports products across state borders.

Because the insurance requirements vary from state to state, you need to make sure you are covered even if you get in an accident in another location.

Transporting materials that are toxic or hazardous presents an even more delicate situation. Contact the Department of Transportation to find out exactly what type of coverage you need to carry. You will then need to file your insurance coverage with both the state and federal governments.

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Type of Business

The type and size of business that you own will affect your rates for car insurance. If you are a small business owner, you will normally pay less for your policy than medium and large business owners will.

Working for yourself is a lot different than having a hundred employees who have access to your business’s vehicles.

If you own a delivery business, you will be paying more for the high mileage that you will accrue.

High mileage means more time on the road, which increases your chances of an accident, so you are considered to be a higher risk to the insurance company.

Each business has its own risk factors, such as time on the road, danger level of the vehicles being used, and products being carried.

Some policies will need coverage for only the vehicle and drivers involved, while others will need coverage for the items being delivered and transported. These will all affect your rate.

Risk of Drivers Involved

The employees driving the vehicles will greatly affect your commercial insurance rates. Let’s say you own a pizza delivery business and the average driver is a teenager.

The National Highway Traffic Safety Administration reports that teenage drivers get into accidents three times more than other drivers.

As a result, insurance companies charge them more for insurance. You will end up paying much higher rates for your insurance policy.

No matter what business you are in, you should hire drivers and employees who are responsible. When you apply for commercial auto insurance, you will need to include the driving records of everyone who will be using your vehicles.

The cleaner the records, the lower your rate will be.

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Location of Your Business

Where your business is located, which includes the zip code and neighborhood, will affect your insurance rates.

Whether your company is located in a residential area or a commercial area will also affect how much you pay.

Mostly it comes down to the chances of theft or vandalism of the vehicles. The safer the area is considered, the lower your rates will be.

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How to Get Business Car Insurance Rate Quotes

There are a few ways that you can get rate quotes for your business, depending on how complicated your needs are and how much time you have. No matter which avenue you choose, you should compare at least a few providers before deciding on one.

In complicated situations, you should speak with an insurance representative personally. You should also probably contact a provider that specializes in commercial auto insurance rather than going with a generalized provider.

A specialized provider will have more experience in commercial insurance and will have more products available to offer your business.

If your business is fairly small and your needs are not too complex, you may choose to use the Internet to get your rate quotes. You can go to a few different sites for business insurance providers and compare their products and quotes.

Some general insurance companies offer business policies, but not all of them do, so it may take a little bit longer to get the information you need.

A faster way to get quotes is to use one site for all of your needs. This site is an example of how you can enter your zip code and business information just once, yet be presented with quotes from many insurance providers. This saves you time and, ultimately, money.

How to Cut Costs for Business Car Insurance

Although business car insurance can come with a large price tag, there may be some things that you can do to minimize costs. Insurance companies will do their best to reward you when you take steps to minimize their risk.

Taking steps to minimize the chance of theft and vandalism is one way to decrease your costs.

If you drive one car for your small business, parking it in your garage at home may help. If you keep the vehicle at your place of business, do your best to keep it in an area with secured parking.

If you have a fleet of vehicles, make sure that they are kept in a gated area that has security enhancements such as cameras, security wires, or protective dogs. Make sure that the vehicles themselves contain security systems such as alarms and tracking devices.

Another way to decrease your business vehicle insurance cost is to minimize your mileage. Since business vehicles are related to quite a few insurance claims, you are charged for that when you sign up for business car insurance.

If you drive fewer miles, you may be able to save some money. In order to receive a low mileage discount, you should not drive your business vehicle more than your personal one.

If you own a business that is only in operation seasonally, you may be able to save money.

Some insurance companies will offer seasonal policies that cover you and your vehicles fully during your business season and keep minimal coverage on them while in storage. Ask your agent if this discount is available.

A CDL stands for a Commercial Driver’s License, and having one can save you money with some insurance companies.

If you have a tow truck or other commercial truck business, try to hire drivers that carry a CDL as you save almost 20 percent with some policies.

Some insurance companies will reward businesses that have stayed in business and have gained valuable experience. If you have been in business for more than three years, ask your insurance agent if you are eligible for any sort of discount.

Another easy way to save some money on your business car insurance is to bundle your policies. As a business owner, the chances of you carrying other types of business policies are pretty good.

The majority of insurance providers will give you a discount if you combine your car policy with your business owner’s policy or general liability policy. Your savings may add up to almost 15 percent.

Business car insurance rates can be fairly high, but exactly how much yours would be depends on many things. Speak with a local agent or do an Internet search for your zip code to get a better idea as to what your rate would be.

Insurance rates for your car can be compared right now by placing your ZIP code into the FREE quote box below!

References:

  1. http://naic.org/state_web_map.htm
  2. http://www.iii.org/articles/do-i-need-commercial-auto-insurance-policy.html
  3. http://www.dot.gov
  4. http://www.nhtsa.gov/Teen-Drivers
  5. https://www.insureyourcompany.com/blog/7-tips-for-saving-money-on-your-commercial-auto-insurance-policy/