Commercial auto insurance is a business policy that covers cars, pickups, vans, trucks and trailers used for work. The National Association of Insurance Commissioners defines it as coverage for vehicles owned by a business that protects against legal liability for injuries and property damage caused by accidents arising from the use of those vehicles. Commercial vehicle insurance is another name for the same coverage. The business buys one policy that lists its covered vehicles, drivers and limits, and the policy pays claims that come from business use of those vehicles.
A standard commercial auto policy combines liability coverage for injuries and damage you cause to others with coverage for your own vehicles, medical payments or personal injury protection, uninsured motorist protection and, when added, hired and non-owned auto coverage for vehicles the business doesn’t own. It is written around covered auto symbols, limits and a radius of operation rather than a single household car, and it excludes things like cargo, tools and employee injuries, which need their own policies.
Most businesses that own vehicles, send employees on the road or deliver for a fee need it, because personal auto policies generally exclude business use. The answer is not yes for everyone: state regulators note that incidental, unpaid use is often still covered by a personal policy. Requirements also depend on where you operate. Minnesota writes its own limits for intrastate for-hire carriers, while South Dakota adopts the federal rules outright, so the same operation can face very different minimums on either side of the state line.
Key Takeaways
- Personal auto policies generally exclude business use. Hauling goods for pay, delivering food or driving a business-titled vehicle calls for a commercial policy.
- Liability is the core coverage. It pays for injuries and damage your drivers cause to others, the part of the policy that protects the business itself.
- A business auto policy defines coverage with numbered symbols. The symbols on your declarations page decide which vehicles are covered.
- Employers have exposure even without company vehicles. Hired and non-owned auto coverage protects the business when staff drive their own cars for work.
- Minnesota and South Dakota set requirements differently. A Minnesota intrastate property carrier needs $100,000 per person in liability; South Dakota applies the federal $750,000 schedule.
- Rates keep rising. Commercial auto rates increased for 54 consecutive quarters through the end of 2024, according to the NAIC.
What Does Commercial Auto Insurance Cover?
A commercial auto policy is built from the same coverage parts as a personal policy, applied to vehicles used in business. The definitions below come from the NAIC’s consumer guide to auto insurance. State regulators publish consumer guides for personal auto policies rather than commercial ones, but the coverage parts work the same way.
Commercial Auto Liability Coverage
Commercial auto liability insurance pays for bodily injury and property damage your business causes to other people while a covered vehicle is being driven for work. It covers the other driver’s medical bills, their vehicle repairs, damage to structures your vehicle hits, and your legal defense if you are sued. It is the coverage every state requires and the one that protects the business, because the largest losses in a crash usually fall on people outside your vehicle: in 2023, 70% of people killed in crashes involving large trucks were occupants of other vehicles (NHTSA, Large Trucks: 2023 Data).
Collision Coverage
Collision coverage pays to repair or replace your business vehicle after it collides with another vehicle or an object, such as a guardrail or a loading dock, regardless of who was at fault. It is usually required by the lender or lessor on a financed or leased vehicle.
Comprehensive Coverage
Comprehensive coverage pays for damage to your vehicle that isn’t caused by a collision, including theft, vandalism, fire, hail, flood and hitting a deer. For businesses in Minnesota and South Dakota, hail and deer strikes are two of the most common reasons to carry it.
Medical Payments and Personal Injury Protection (PIP)
Medical payments coverage pays medical bills for the driver and passengers in your vehicle after an accident, regardless of fault. Personal injury protection goes further and can also cover lost income. Minnesota is a no-fault state and requires PIP of $40,000 per person: $20,000 for medical expenses and $20,000 for income loss, replacement services, funeral and survivor benefits (Minn. Stat. 65B.44).
Uninsured and Underinsured Motorist Coverage
Uninsured and underinsured motorist coverage pays for injuries to your driver and passengers when the at-fault driver has no insurance or not enough to cover the loss. Both states in First State Insurance’s service area require it:
- Minnesota requires uninsured and underinsured motorist coverage of $25,000 per person and $50,000 per accident (Minn. Stat. 65B.49, subd. 3a).
- South Dakota requires uninsured motorist coverage of $100,000 per person and $300,000 per accident, four times its own 25/50 liability minimum. Underinsured motorist coverage is also mandatory, must equal the policy’s bodily injury limits up to 100/300, and can’t be rejected (SDCL 58-11-9, 58-11-9.4).
Hired and Non-Owned Auto Coverage (HNOA)
Hired and non-owned auto coverage protects the business when someone drives a vehicle the business doesn’t own for work, such as a rental car on a job or an employee using their own car to run errands or visit clients. It is liability coverage only: it pays for injuries and damage to others, not for damage to the rented or employee-owned vehicle itself.
The exposure exists because courts generally hold an employer responsible for an employee’s driving when the driving is part of the job and serves the business. On a business auto policy, this coverage is written as symbol 8 for hired autos, meaning autos the business leases, hires, rents or borrows, and symbol 9 for non-owned autos, including employee-owned vehicles used in the business, as summarized by the Pennsylvania municipal risk pool’s guide to auto symbols. An employer with no company vehicles but staff who drive for work usually needs this coverage.
What Types of Vehicles Does Commercial Auto Insurance Cover?
Commercial auto insurance covers any vehicle used for business that is listed or described on the policy, including:
- Cars and SUVs used by sales staff, managers and service technicians
- Pickup trucks used by contractors and landscapers
- Cargo and passenger vans
- Box trucks, dump trucks and tow trucks
- Food trucks
- Trailers attached to a covered power unit
Heavy tractor-trailers and for-hire freight are usually written under a trucking policy, covered in commercial truck insurance requirements.
What Commercial Auto Insurance Doesn’t Cover
A commercial auto policy covers vehicles and the liability that comes from driving them. These common losses need separate coverage:
| Not covered by commercial auto | Coverage that handles it |
| Goods or freight you are hauling | Motor truck cargo or inland marine coverage |
| Tools and equipment stored in the vehicle | Inland marine (tools and equipment) coverage |
| Injuries to your own employees while driving | Workers’ compensation |
| Damage to a rented or employee-owned vehicle | Hired auto physical damage, or the owner’s own policy |
| Intentional damage or use outside the business purpose shown | Excluded by policy terms |
| Normal wear, mechanical breakdown and maintenance | Not insurable; a maintenance cost |
Optional Coverages for Commercial Auto Policies
Depending on the vehicles and the work, businesses add these coverages to a commercial auto policy:
- Towing and labor: pays for roadside service and towing after a breakdown.
- Rental reimbursement: pays for a replacement vehicle while a covered vehicle is being repaired.
- Gap coverage: pays the difference between a vehicle’s value and the loan or lease balance after a total loss.
- Trailer interchange: covers damage to a non-owned trailer in your care under a trailer interchange agreement.
- Motor truck cargo coverage: covers freight and goods being hauled for others.
- Non-trucking (bobtail) liability: for owner-operators leased to a motor carrier. Federal rules give the carrier exclusive control of leased equipment and require the lease to state who provides other insurance, naming bobtail insurance specifically (49 CFR 376.12).
What Is a Business Auto Policy?
A business auto policy is the standard commercial auto policy form used for businesses that aren’t in the auto or trucking trade. It sets out which vehicles are covered, who is insured, the limits, and where the coverage applies.
Types of Commercial Auto Policies: Business Auto, Garage and Truckers
The NAIC recognizes separate commercial auto sub-types, and choosing the right one matters (NAIC Product Coding Matrix):
- Business auto: vehicles used in commerce by businesses outside the garage trade, such as contractors, delivery services and professional firms.
- Garage: auto dealers, repair shops, service stations and parking garages.
- Truckers: businesses that transport property by auto for hire, including trailer interchange exposure.
A repair shop that buys a business auto policy, or a for-hire hauler that buys one instead of a trucking policy, can find coverage missing when a claim comes in.
Covered Auto Symbols Explained
Covered auto symbols are numbered codes on the declarations page that decide which vehicles each coverage applies to. A federal appeals court opinion reproduces the form language for three of the most common symbols (Bennett v. Hartford, Fifth Circuit):
| Symbol | What it covers |
| 1 | Any auto: the broadest option, covering any vehicle used in the business |
| 2 | Owned autos only, plus, for liability, trailers you don’t own while attached to power units you own |
| 7 | Specifically described autos: only vehicles listed on the declarations page with a premium charge |
| 8 | Hired autos: vehicles the business leases, hires, rents or borrows |
| 9 | Non-owned autos: vehicles the business doesn’t own that are used in the business, including employees’ cars |
Symbols 8 and 9 are described from the PERMA risk pool’s explanatory guide, not the form text.
The practical point: if your liability coverage shows symbol 7, a new truck you buy isn’t covered until it is added to the policy, while symbol 1 or 2 picks it up automatically. Check which symbol applies to each coverage on your declarations page.
Who Is Insured Under a Commercial Auto Policy?
The business named on the policy is insured for any covered auto. Anyone else using a covered auto you own, hire or borrow with your permission is generally insured as well, subject to exceptions set out in the policy, such as the owner of a vehicle you hire from them. Employees driving their own cars for work are covered for liability only when hired and non-owned coverage applies, and their own personal policy normally responds to damage to their car.
Combined Single Limit vs. Split Limits
Commercial auto liability comes in two limit structures. A combined single limit, such as $1,000,000, is one amount available for all bodily injury and property damage from an accident. Split limits, written like 100/300/50, set separate caps: $100,000 per person for injury, $300,000 per accident for injury and $50,000 for property damage. A combined single limit is simpler and more flexible when one person’s injuries are severe, and it is the structure contracts and federal filings usually referenced.
Coverage Territory and Radius of Operation
A business auto policy usually covers accidents in the United States, its territories and possessions, Puerto Rico and Canada. Separately, underwriters rate each vehicle by its radius of operation, how far from its garaging location it normally travels. A local vehicle is priced differently from one that runs regional or long-distance routes, so report routes accurately; a vehicle that regularly travels farther than the policy shows can cause problems at claim time.
Commercial vs. Personal Auto Insurance
The difference between commercial and personal auto insurance is what the vehicle is used for. Personal auto insurance is written for household driving and commuting. Commercial auto insurance is written for vehicles used to earn money, with higher limits, business-specific coverage and rating based on the work.
When Personal Auto Insurance Won’t Cover Business Use
Maine’s Bureau of Insurance states that most personal auto policies exclude business use of a personal auto (Maine Bureau of Insurance), and the Federal Trade Commission gives consumers the same warning. The exclusion shows up in policy language as used as a “public or livery conveyance”, the wording North Carolina’s Department of Insurance points to (NCDOI). A personal policy is likely to deny a claim when the vehicle is:
- Carrying people or property, including food or packages, for a fee
- Titled or registered to a business
- Used mainly to haul tools, equipment or goods for work
- Driven by employees as part of their job
When Personal Auto Insurance Still Applies
Not every work-related trip needs a commercial policy. Washington’s Office of the Insurance Commissioner notes that incidental, non-commercial use, such as occasionally giving someone a ride, is generally covered by a personal policy, as is unpaid volunteer driving. Commuting to a single workplace is personal use. The line is crossed when driving becomes part of the job, earns money or uses a business-owned vehicle. When in doubt, ask your agent to review how the vehicle is actually used.
Delivery and Rideshare Drivers
Delivery and rideshare drivers face the sharpest version of the gap. North Carolina’s regulator explains that the livery exclusion applies whenever the driver is logged into a transportation or delivery platform, whether or not a passenger or order is in the car. The NAIC adds that coverage gaps arise when the app is on but no ride has been accepted, and that its model rideshare law doesn’t require medical payments, personal injury protection, collision, comprehensive or uninsured motorist coverage (NAIC, Commercial Ride-Sharing). Drivers should confirm what the platform’s policy covers in each period and ask about a rideshare endorsement or commercial policy for the gaps.
Do I Need Both Commercial and Personal Auto Insurance?
Yes, often. If a business owns its vehicles, those vehicles go on a commercial policy while the owner’s household cars stay on a personal policy. A sole proprietor who uses one vehicle for both may be able to cover it on a single commercial policy, which can include personal use. The right setup depends on who owns the vehicle and how it is used.
Is Commercial Auto Insurance More Expensive Than Personal, and Why?
Yes, commercial auto insurance usually costs more than personal auto insurance for the same vehicle. Business vehicles are driven more, often by several drivers, carry heavier loads, and face larger liability claims, so commercial policies carry higher limits. The market data explains the rest: in 2024, commercial auto liability ran a 105.1% combined ratio and lost money for insurers on underwriting, while personal auto pricing followed a different path (NAIC Report on Profitability by Line by State).
Who Needs Commercial Auto Insurance?
Businesses use commercial auto insurance to cover the vehicles that haul tools and materials to job sites, deliver goods, carry clients or employees, and take staff to appointments and service calls. The need usually falls into one of three profiles:
- Businesses that own or lease vehicles: contractors, landscapers, plumbers, electricians, delivery services, food trucks and any company with a vehicle titled in its name.
- Employers whose staff drive their own cars: sales teams, home health services, real estate offices and consultants. These businesses need hired and non-owned auto coverage even with no company vehicles.
- Delivery and gig drivers: anyone carrying food, packages or passengers for pay.
Most commercial vehicle operators are small. Roughly half of carriers registered with the FMCSA operate a single power unit (FMCSA registration statistics).
Do I Need Commercial Auto Insurance?
Yes, if the vehicle is owned by the business, used to carry goods or people for pay, driven by employees for work, or required by a contract to carry commercial limits. No, in most cases, if the driving is occasional, unpaid or limited to commuting, where a personal policy generally still applies.
Does a Sole Proprietor Need Commercial Auto Insurance?
Yes, when the vehicle is used mainly for the business, carries business signage and tools, or is used to deliver or haul for pay. A sole proprietor who drives occasionally to meet clients may be covered by a personal policy with a business-use rating, so describe the actual use to your agent.
Commercial Auto Insurance Requirements in Minnesota and South Dakota
Minnesota and South Dakota answer the same question in opposite ways. Minnesota writes its own limits for intrastate for-hire carriers. South Dakota adopts the federal rules wholesale. The same property-hauling operation needs $100,000 per person in liability in Minnesota and faces the federal $750,000 schedule in South Dakota.
Minnesota Requirements
Every vehicle registered in Minnesota must carry at least $30,000 per person and $60,000 per accident for bodily injury, and $10,000 for property damage, plus PIP and uninsured and underinsured motorist coverage (Minn. Stat. 65B.49).
For-hire intrastate carriers face higher limits set by commissioner order under Minn. Stat. 221.141, with policies required to include the federal MCS-90 endorsement. The requirement is triggered by for-hire status, not vehicle weight (Minn. R. 8855.0450; MnDOT Minnesota Trucking Regulations, Section 06):
| Minnesota intrastate class | Minimum coverage |
| Motor carrier of property | $100,000 / $300,000 liability, $50,000 property damage |
| Household goods carrier | Same, plus $50,000 cargo |
| Building movers | $500,000 motor vehicle liability, $500,000 general liability |
| Passenger carrier, 16 or more passengers | $5,000,000 |
| Passenger carrier, 8 to 15 passengers | $1,500,000 |
| Limousine | $1,500,000 per accident per vehicle, $100,000 property damage |
Businesses based in Worthington and across the state can match these filings with commercial auto insurance in Minnesota.
South Dakota Requirements
Every vehicle registered in South Dakota must carry at least $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage (SDCL 32-35-70), plus the 100/300 uninsured motorist coverage and matching underinsured motorist coverage described above.
South Dakota doesn’t set its own dollar figures for motor carriers. It adopts federal Part 387 by reference, as amended through January 1, 2026 (SDCL 49-28A-3). An intrastate carrier in South Dakota therefore faces the federal schedule: $750,000 for general freight in vehicles of 10,001 pounds or more, higher tiers for hazardous materials, and $1,500,000 or $5,000,000 for passenger carriers depending on seating. Businesses in the Sioux Falls area can review options for commercial auto insurance in Sioux Falls.
Federal Requirements for Interstate Commercial Vehicles
Federal financial responsibility rules apply to for-hire carriers operating in interstate commerce. The figure that matters most to a small business is not the one usually quoted: fleets made up only of vehicles under 10,001 pounds carrying non-hazardous property need $300,000 (49 CFR 387.303). Heavier for-hire freight vehicles need $750,000, with $1,000,000 and $5,000,000 tiers for hazardous materials (49 CFR 387.9).
Two details catch operators off guard. Interstate commerce includes a trip between two points in one state when the shipment began or ends outside the state, so a local delivery leg can count as interstate (49 CFR 390.5). And the required MCS-90 endorsement is not extra coverage for the carrier: it guarantees the public is paid even when the policy would otherwise exclude the claim, and the carrier agrees to reimburse the insurer for those payments (FMCSA Form MCS-90).
The federal minimum itself is under scrutiny. In a 2026 report to Congress, the FMCSA found that the $750,000 minimum set in 1985 would equal $2,192,825 in 2024 dollars on core inflation and $3,725,822 on medical inflation, and that current limits don’t adequately cover catastrophic crashes, though the agency made no recommendation to raise them (FMCSA Report to Congress). Meeting a minimum is not the same as being adequately insured.
How Much Does Commercial Auto Insurance Cost?
Commercial auto insurance cost depends on the vehicles, drivers, routes and limits, so no single average fits every business. Regulator data does explain why prices are high and still rising.
Why Commercial Auto Rates Keep Rising
Commercial auto rates rose 8.9% in the fourth quarter of 2024, the 54th consecutive quarter of increases (NAIC 2024 full-year results). The liability side of the policy drives it: commercial auto liability earned $45.9 billion in premiums in 2024 with a 105.1% combined ratio and a loss on insurance transactions, while commercial auto physical damage ran a 56.0% loss ratio and a 10.9% profit (NAIC Report on Profitability by Line by State). In Texas, the one state that publishes this detail, the Department of Insurance reports that liability losses and claim expenses have averaged almost 101% of premium since 2017 (TDI Commercial Auto Biennial Report).
What Affects Your Commercial Auto Premium
Underwriters price each policy on the risk it carries:
- Vehicle type, weight and value
- Number of vehicles and drivers
- Driver ages and motor vehicle records
- Radius of operation and where vehicles are garaged
- Industry and what the vehicles carry
- Liability limits and deductibles
- Claims history
Shopping the renewal matters because insurers price the same risk very differently. In Connecticut, 222 companies filed commercial auto rates in 2025, with individual rate changes ranging from about minus 20.1% to plus 84.6% (Connecticut Insurance Department).
Are Commercial Auto Insurance Premiums Tax-Deductible?
Yes, commercial auto insurance premiums are generally deductible as a business expense, with two limits set by the IRS (IRS Publication 463). If you use the standard mileage rate, insurance is already built into the rate, so you can’t deduct the premium separately. If you use the actual expense method and the vehicle is used for both business and personal driving, you can deduct only the business-use share of the premium. Ask your tax professional which method fits your business.
What Happens If You Don’t Have Commercial Auto Insurance?
Driving for business without the right coverage exposes the business in four ways:
- Denied claims: a personal policy can refuse a claim that arises from business use.
- Personal and business liability: without liability coverage, the business and its owner pay injury and damage claims directly.
- Regulatory penalties: for-hire carriers without required filings risk losing operating authority in Minnesota, South Dakota or at the federal level.
- Lost contracts: customers, landlords and general contractors often require proof of commercial auto limits before work begins.
The stakes are real: transportation incidents caused 38.2% of all workplace deaths in the United States in 2024, more than any other event (BLS Census of Fatal Occupational Injuries).
Frequently Asked Questions
What Is an Example of Commercial Auto Insurance?
A landscaping company insures its three pickup trucks and trailers on a commercial auto policy. When an employee backs into a customer’s garage, the policy’s liability coverage pays for the garage, and collision coverage pays to repair the truck.
Does Commercial Auto Insurance Cover Personal Use?
Yes, in most cases. A commercial policy covers a listed vehicle whether it is being driven for work or personal errands, which is why a sole proprietor may be able to insure one vehicle on a commercial policy.
What Does Commercial Auto Liability Insurance Cover?
Commercial auto liability insurance covers bodily injury and property damage that your business vehicles cause to other people, plus the cost of defending the business if it is sued. It doesn’t cover damage to your own vehicle or injuries to your own employees.
Are Trailers Covered Under Commercial Auto Insurance?
Yes, for liability, when the trailer is attached to a covered vehicle. Damage to the trailer itself needs physical damage coverage on the trailer, and a non-owned trailer used under an interchange agreement needs trailer interchange coverage.
What If a Contract Requires Specific Liability Limits?
Buy the limit the contract requires, usually a combined single limit such as $1,000,000, and ask your agent for a certificate of insurance. Contracts often also require the customer to be named as an additional insured, which is added by endorsement.
How Much Is a $1 Million Commercial Auto Policy?
There is no fixed price. The premium for a $1,000,000 limit depends on the vehicles, drivers, radius and claims history, so the only accurate answer is a quote based on your operation.
How First State Insurance Helps
First State Insurance works with businesses across southwest Minnesota and South Dakota from its offices in Worthington and Sioux Falls, including contractors, landscapers, restaurant owners and delivery fleets. The team helps businesses choose the right covered auto symbols and limits, add hired and non-owned coverage, meet Minnesota and South Dakota filing requirements, manage fleet changes and issue certificates of insurance. To review your vehicles or get a quote, look at our commercial auto insurance policy options or contact our team.
Disclaimer
This article is for general information only and is not insurance, legal or tax advice. Coverage, eligibility and terms vary by state, insurer and underwriting, and are determined only by the issued policy and its endorsements. State and federal requirements summarized here can change; confirm current rules with the relevant agency. Consult a licensed insurance agent about your operations, a tax professional about deductions, and an attorney about legal or regulatory questions.
Disclosure
First State Insurance is an independent insurance agency and may be compensated when policies are placed through it. Statistics and requirements are drawn from government agencies, state statutes and regulations, and federal court opinions cited in the text, and reflect the most recent information available when this article was published or updated.