Car Insurance for Small Businesses

Car insurance for small businesses must meet the state’s commercial auto insurance requirements. These requirements will vary by state and can result in expensive premiums. Follow our guide for tips to lower small business car insurance rates and compare commercial auto insurance quotes for free with our online quote comparison tool below.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Oct 19, 2021

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Things to know...

  • Small business owners should understand their state’s commercial auto insurance requirements
  • These commercial requirements can result in high premiums in some cases
  • There are many steps that small business owners can take to save money on commercial auto insurance premiums

If you are like most drivers, you have a car insurance policy for your personal vehicles.

This coverage may pay for your own vehicle repairs and other related expenses if you are involved in an accident, if your vehicle is stolen, and if other unfortunate events occur.

It may also pay for your liability-related expenses if you cause the auto accident.

As a small business owner, you may not realize that you may need to buy special commercial coverage for you and your employees who drive company cars or trucks.

This is why it’s imperative that in addition to seeking out quotes from the best car insurance companies, you’ll also need to do your homework on the best coverage.

In most areas, drivers are legally required to have adequate auto liability coverage, but there may be additional coverage requirements that must be met if you plan to drive a business vehicle or to use your personal vehicle for business activities.

Compare car insurance quotes specific to your situation. Enter your ZIP code above to find the best rate for the coverage you need.

Why Your Small Business Vehicles Need to Be Insured


Auto insurance gives you a convenient and affordable way to pay for vehicle repairs, medical bills and more in the event of an accident or another event.

Many small businesses operate on a very tight budget, and you may not reasonably be able to afford to pay thousands of dollars or more in expenses if you or your workers are involved in an accident.

There are other reasons that you need to buy auto insurance for your small business’s vehicles and drivers.

Legal Requirements for Small Business Vehicles

Just as your state’s laws require you to take financial responsibility for damages you cause to others while driving your personal vehicle, these laws also cover commercial drivers.

However, many states have special insurance requirements that businesses must meet. These may be related to:

  • The type or size of the vehicle
  • If customers or passengers will be in the vehicle
  • The type of cargo that may be hauled in or by the vehicle

It is important that you understand your state’s commercial vehicle insurance requirements so that you comply with the law at all times. The penalties associated with being uninsured or under-insured can be significant and costly, and they vary from state to state.

Liability Related to Injured Workers

Not all car accidents may be caused by your workers or other motorists on the road. In some cases, for example, poor vehicle maintenance is to blame.

If you fail to take every precaution possible to maintain your vehicles in a safe condition and an accident occurs, your injured workers may become a liability issue for you. This is just one example of many that could result in liability issues from your own employees.

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The Risk Associated With Uninsured Motorists

Accidents can also be caused by other motorists on the road. By law, these motorists are financially liable for the damages they cause to your vehicles as well as any medical expenses for your employees, damaged equipment or products and more.

According to the Insurance Information Institute (III), uninsured motorists are common, and they may lack the financial means to pay for these expenses. In the case of a costly accident, even insured motorists may not have sufficient coverage to pay for all expenses, and it may be necessary to pay for some expenses on your own.

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Understanding How Your Business Use of the Vehicles Affects Coverage Needs


There are many businesses that use vehicles for various purposes. For example:

  • A tour company uses vehicles to transport passengers around town and beyond.
  • A cement mixing company uses commercial trucks to deliver wet cement to desired locations.

Commercial auto insurance requirements are not the same as personal auto requirements. For example, you may need to purchase substantially more personal injury coverage if you regularly transport passengers in your commercial vehicles.

If you drive a larger or heavier vehicle, you may need to obtain a higher level of property damage coverage to comply with your state’s laws.

Strategies to Keep Business Auto Insurance Expenses Affordable


Because small business owners may need to purchase specialized auto insurance policies for the business use of vehicles, the premiums can be costly in some cases.

Small business owners know that maintaining productivity and saving money are essential. Shopping around to compare rates is a smart idea that can result in substantial savings. It is wise to compare rates from a few different providers every few months if you want to keep insurance costs as low as possible.

Select a Higher Deductible Amount

Another thoughtful option to consider if you want to enjoy a lower premium is to select a higher deductible when you request quotes. This is one of the easiest ways to save money on insurance because you simply have to request a different deductible.

However, the deductible should not be so high that it is not affordable for you to pay when you need to file a claim.

Adjust Coverage Types and Limits

You can see that the expenses that your small business can face if you or your team members are in an accident can be significant. The last thing you want is to be under-insured, and this is because this could result in you having to pay many expenses out of your own pocket.

However, adjusting coverage types and limits can help you to better manage your auto insurance expense. At all times, your coverage should comply with state and lender minimum requirements.

Optional coverage includes things such as:

  • towing service
  • rental car reimbursement
  • uninsured motorist coverage

The optional coverage should be purchased with care and only when you can afford the higher premium amount that these coverages will generate.

File Claims Only When Necessary

A critical component that affects insurance rates is your driving and claims history. Some auto accidents are minor fender benders, and the damage may easily be handled outside of insurance.

By not filing a claim, you may keep the event off of your insurance company’s records so that you can avoid a rate hike.

Getting vehicles repaired as needed is necessary if you want to protect their value and ensure the safety of your team and others on the road.

Therefore, while you should only file a claim when necessary, you should not avoid filing a claim simply to save money on your premium.

Regardless of whether you drive your own car for business-related tasks or you have a full fleet of commercial vehicles, it is necessary to understand what the commercial auto insurance requirements are in your state and to comply with them fully.

Take advantage of discounts and other methods to manage premium expenses while getting the full level of coverage that you need.

Enter your zip code into our free comparison tool to find the best rate for the coverage you need.


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