How Much Does Commercial Auto Insurance Cost?

Businesses with a commercial auto insurance policy limit of $1 million pay a median price of $142 per month, or $1,704 per year, according to statistics published by Insureon, a marketplace for small-business insurance. The company reports that ​​44% of small-business owners pay less than $1,500 per year for commercial auto coverage.

Of course, actual costs vary widely, and scenarios range from a self-employed person driving their own car for work to the owner of a small business with a fleet of vehicles.

A commercial auto insurance policy provides your business legal protection from property damage and injuries in case of an accident.

Buyers can influence some factors affecting the price of a policy — levels of liability and medical coverage, deductibles — but other variables affect the price as well. Here are some of the key factors that determine the cost of commercial car insurance.

Location

The city or state where you conduct business has a direct impact on how much you pay for your auto policy. Heavily populated cities and ZIP codes that have frequent accidents will result in a higher rate.

“All rates are regulated by the state,” says Steve Compton, an independent insurance broker for over 17 years based in Georgia and licensed in eight states.

“The main thing they are looking at is the frequency of accidents. A state that has frequent losses has higher rates. Less populated areas usually have lower rates.”

If your business involves traveling across state lines, your rate may be higher than if your business is conducted strictly locally.

Type of vehicle

Your business vehicle and how it's used also determines how much or how little you pay for car insurance. Commercial vehicles are more expensive to insure than personal vehicles used for business.

For instance, a policy for a courier service using a box truck for deliveries will cost more than a policy for a local real estate agent using their car to go to and from the office and show properties.

Insuring additional vehicles or using your vehicles more frequently also increases the rate of your policy. The more often a vehicle is on the road, the greater the likelihood of an accident.

Driving record and credit score

The more accidents, claims, and moving violations a driver has, the more expensive their commercial auto insurance policy is. The driving record for anyone driving on behalf of a business is taken into consideration when determining the policy rate. Regardless of how many drivers a business has, each one counts.

Another factor that affects the cost of commercial auto insurance is credit score. Both the company's credit score and the primary owner’s credit score are considered when pricing a commercial policy. A lower credit score is seen as a greater risk, causing the cost of coverage to increase.

How to save on commercial auto insurance

Here are a few ways to save on business auto insurance:

Be patient and shop around

Whether it’s a more popular national brand or a new startup company, there are plenty of options when it comes to finding commercial auto insurance.

“Be patient and shop around, that’s the number one thing,” says Compton.

“Your local ‘franchise’ may have limited options because they are only selling one product. But there are hundreds of carriers writing commercial auto in the United States,” he adds.

Take your time and do your research to find the best price for the coverage that fits your business.

Work with an experienced agent

An experienced agent can make sure you have the right amount of coverage and protection for your commercial policy.

There are cases where you may be overinsured or underinsured. Not having the proper coverage can waste time, money and potentially put your business in jeopardy. If you are underinsured, not only are you not properly protected in case of an emergency, but you may be vulnerable to lawsuits. If you are overinsured, you're wasting money by paying for coverage you don't need.

Working with the correct agent can properly protect your business and help you save money.

Telematics

Another method for saving money on commercial auto insurance is the use of a technology called telematics. Telematics records detailed information about your driving habits, like how fast and far you drive, and how often you brake.

Many insurance companies are now using telematics to price auto policies. According to Access , a leading provider in telematics, fleets that do not use telematic data spend nearly 12% more on labor costs and up to 40% more on fuel consumption.

If you seldom use your company vehicle, are a consistently good driver, or just want to manage the efficiency of your business vehicles, then telematics can help you save on your commercial auto insurance policy.