If you run a small business and use vehicles for work, you probably know how important it is to keep them running safely. But there’s something just as important as maintenance—and that’s having the right insurance. Commercial auto insurance protects your business when your vehicles are used for work.
This guide will help you understand what commercial auto insurance really covers. We'll explain the main parts of a policy, show why it matters for small fleets, and give you helpful examples so you can make smart choices for your business.
Key Takeaways
-
Commercial auto insurance is essential for businesses that use vehicles for work-related tasks such as deliveries, transporting equipment, or visiting job sites.
-
A small fleet typically includes 2 to 20 vehicles—even a few vehicles used for business require specialized coverage that personal auto policies don’t provide.
-
Core coverage includes:
-
Liability insurance for injuries or damage caused to others.
-
Collision coverage for your own vehicle repairs after an accident.
-
Comprehensive insurance for theft, vandalism, fire, or natural disasters.
-
Medical payments for drivers and passengers injured in an accident.
-
Uninsured/underinsured motorist coverage for accidents caused by poorly insured drivers.
-
Optional coverages can add vital protection, especially for small fleets that rely heavily on a few key vehicles:
-
Hired and Non-Owned Auto (HNOA)
-
Rental reimbursement and downtime
-
Towing and roadside assistance
-
Cargo insurance
-
Gap coverage
-
Telematics-based discounts
-
Different industries require tailored coverage:
-
Contractors may need tool and job-site protection.
-
Wholesalers and distributors often require cargo and downtime protection.
-
Hospitality businesses should insure passenger vehicles for extra liability.
-
Liquor distributors and gas station operators may need industry-specific policies.
-
Factors affecting policy costs include: fleet size, vehicle type, driver records, location, and claims history.
-
Maintaining your policy is just as important as choosing it:
-
Review coverage annually.
-
Keep driver and vehicle lists updated.
-
Maintain fleet safety and driver training records.
-
Common mistakes to avoid:
-
Assuming personal insurance will cover business use.
-
Choosing the cheapest policy without checking coverage limits.
-
Failing to read and understand your policy details.
-
Commercial auto insurance helps your business recover quickly from vehicle-related incidents, avoids legal trouble, and protects your income.
-
Kelstar Insurance provides customized commercial auto coverage for small fleets through a network of 50+ insurance partners, helping businesses stay protected and compliant.
What Is Commercial Auto Insurance?
Commercial auto insurance is made for vehicles used in a business setting. This is different from personal car insurance, which covers cars used for everyday personal errands. If you own a company that uses trucks, vans, or cars for things like deliveries, transporting equipment, or driving to job sites, commercial auto insurance is the right fit.
A small fleet usually means a business has between 2 and 20 vehicles. These might be used by different drivers, across many locations, and for different jobs. Because of this, the risks are higher than they would be for a personal car—and your coverage needs to reflect that.
If one of your vehicles is in an accident, or if something is stolen, a proper commercial auto policy helps your business recover faster.
What Does Commercial Auto Insurance Cover?
Let’s look at what’s included in a standard commercial auto policy and how it protects your business.
1. Liability Coverage
This is one of the most important parts of the policy. It protects your business if one of your drivers causes an accident. There are two types of liability coverage:
-
Bodily Injury: Pays for injuries to other people caused by your driver.
-
Property Damage: Covers damage to someone else’s car, building, or other property.
Example: One of your drivers rear-ends a car at a stoplight. The other driver has a broken tail light and needs medical care for their neck. Your policy would pay for their repairs and medical bills.
2. Collision Coverage
This helps pay for damage to your own vehicles if they’re involved in an accident, even if your driver is at fault.
Example: A delivery van from your fleet hits a fence while backing up. Collision coverage helps pay for repairs to your van.
3. Comprehensive Coverage
This part of the policy protects your vehicles from things that aren't related to accidents—like theft, fire, or storms.
Example: Someone breaks into your work truck and steals tools. Or a tree branch damages the roof of a van. Comprehensive coverage helps cover the cost.
4. Medical Payments (MedPay)
This pays for medical bills for your driver and any passengers after an accident—no matter who was at fault.
Example: Two employees are injured when another driver runs a red light and hits their vehicle. Medical payments coverage helps with hospital bills and doctor visits.
5. Uninsured/Underinsured Motorist Coverage
Sometimes, accidents are caused by people who don’t have enough insurance—or none at all. This coverage helps protect your business in those cases.
Example: Your service vehicle is sideswiped by a driver who doesn’t carry insurance. This coverage helps pay for the damage and any injuries to your driver.
Extra Coverage Options for Small Fleets
Besides the basic coverage, you can also choose to add more protection. These extra coverages are especially helpful if you run a small business and depend on your vehicles every day.
Hired and Non-Owned Auto Coverage (HNOA)
This helps when employees use their own cars or if your business rents vehicles for short-term use.
Example: An employee uses their personal car to make a delivery and gets in an accident. HNOA coverage can help with the costs.
Rental Reimbursement and Downtime Coverage
If one of your vehicles is in the shop after an accident, this coverage helps pay for a rental vehicle. It can also help cover business income you might lose while waiting for repairs.
Example: Your main work truck is being repaired for five days. This coverage pays for a temporary vehicle and the lost business income from missed appointments.
Towing and Roadside Help
This pays for towing and emergency assistance if a vehicle breaks down.
Example: A flat tire leaves your delivery van stuck on the highway. This coverage pays to tow the van to a nearby repair shop.
Cargo Insurance
Cargo coverage protects the items your vehicles are carrying.
Example: A plumbing company van is broken into, and expensive tools are stolen. This insurance helps cover the loss.
Gap Insurance
If a leased or financed vehicle is totaled in a crash, gap insurance helps pay off the loan or lease if you owe more than the vehicle is worth.
Example: You still owe $22,000 on a van, but it’s only worth $18,000 when it’s totaled. Gap insurance pays the difference.
Safe Driving Programs
Some insurance companies offer discounts if you install devices in your vehicles that monitor driving habits—like speeding, braking, and location.
Why Industry Matters: Special Fleet Needs
Each industry uses vehicles in different ways. Here’s how commercial auto coverage can be shaped based on your business:
Contractors
Contractors use vehicles to haul heavy tools and equipment. Coverage should include the tools being transported and protections for job-site accidents.
Distributors and Wholesalers
These businesses need their vehicles to make deliveries on time. Downtime coverage and safe driving discounts can help if a vehicle goes out of service.
Hospitality and Hotels
Shuttles and passenger vans must be insured for passenger injuries and possible claims. You’ll need extra liability and medical coverage.
Gas Station Operators
Sometimes, these businesses use vehicles for transport or repairs. Comprehensive and gap insurance are both helpful if a vehicle is leased or stolen.
Liquor Distributors
Vehicles used to transport alcohol may need special coverage due to state regulations and the value of the cargo.
What Affects the Cost of Insurance?
Insurance companies look at different things to decide how much your policy will cost. Here are some of the main factors:
-
How Many Vehicles You Have: More vehicles usually mean higher premiums.
-
What Kind of Vehicles You Use: Large trucks or special-use vans might cost more to insure than small cars.
-
Driving History: If your drivers have good records, you’ll likely pay less.
-
Where You Drive: Areas with more traffic or accidents can lead to higher rates.
-
Your Claims History: Fewer past accidents usually mean better pricing.
Getting a custom quote through an experienced insurance advisor can help you find the best value.
Keeping Your Policy Up to Date
Once you have insurance, it’s important to manage it well so it continues to meet your business needs.
-
Review It Every Year: Your business changes. Maybe you add a new van or hire a new driver. Make sure your policy reflects that.
-
Remove Old Vehicles and Drivers: Don’t pay for coverage you no longer need.
-
Keep Track of Maintenance and Safety Training: If you can show your fleet is well maintained and your drivers are trained, it can help with claims and pricing.
Common Mistakes to Avoid
Even experienced business owners can misunderstand commercial auto coverage. Here are a few common mistakes:
-
Thinking Personal Insurance Is Enough: It usually isn’t. Most personal policies won’t cover vehicles used for work.
-
Choosing the Cheapest Option: Cheaper coverage might leave you exposed to big losses later.
-
Not Reading the Details: Always know what’s included and what isn’t in your policy.
Working with a knowledgeable insurance team helps you avoid these problems and get the right protection from the start.
Why This Coverage Matters
If your business relies on vehicles, even just a few, you need the right insurance to stay protected. Whether your team drives to service calls, makes daily deliveries, or transports customers, accidents and unexpected events can happen.
Having good commercial auto insurance means:
-
Your business won’t stop if a vehicle is damaged.
-
You won’t face large out-of-pocket costs for medical or repair bills.
-
Your drivers and customers will be safer.
Conclusion
Making sure your fleet is insured isn’t just about checking a box—it’s about making your business stronger. The right policy helps you bounce back after an accident, stay on schedule, and keep your drivers protected.
At Kelstar Insurance, we help businesses with small fleets find the right insurance solutions. We work with over 50 top carriers to match you with a plan that fits your vehicles, your drivers, and your budget.
👉 Want help choosing the best commercial auto policy? Schedule a consultation with Kelstar Insurance today and let’s make sure your business vehicles are protected.
Frequently Asked Questions (FAQs)
1. What is commercial auto insurance?
Commercial auto insurance is a policy that protects vehicles used for business purposes. It covers things like accidents, vehicle damage, injuries, theft, and liability. It’s required when vehicles are used for work tasks, such as making deliveries, transporting tools, or traveling between job sites.
2. How is commercial auto insurance different from personal auto insurance?
Personal auto insurance is meant for everyday driving, like going to the store or commuting. It usually doesn’t cover vehicles used for business. Commercial auto insurance includes higher liability limits and specialized protections for business activities, employees, and company-owned vehicles.
3. What qualifies as a small fleet?
A small fleet typically includes between 2 to 20 vehicles owned, leased, or used by a business. These vehicles are often used by different employees for business-related tasks, which makes commercial auto insurance essential.
4. Is commercial auto insurance required by law?
Yes. Most states require businesses to carry minimum liability insurance for vehicles used in business. If your company owns or uses vehicles for work, you are legally required to carry commercial auto coverage.
5. Do I need commercial auto insurance if I only have one work vehicle?
Yes. Even if you only have one vehicle used for business, a personal auto policy likely won’t cover accidents that happen while using it for work. You should have a commercial policy to stay protected.
6. What does liability coverage include?
Liability coverage pays for injuries or property damage your driver causes in an accident. It includes:
7. What optional coverages are available for small fleets?
Optional coverages include:
-
Hired and Non-Owned Auto (HNOA)
-
Rental reimbursement and downtime coverage
-
Towing and roadside assistance
-
Cargo insurance
-
Gap insurance
-
Telematics-based safety discounts
These add-ons can help reduce business interruptions and financial loss.
8. Can employees use their own cars for business under my policy?
Not automatically. If employees use their personal vehicles for work tasks (like deliveries or errands), you need Hired and Non-Owned Auto (HNOA) coverage to protect your business from potential claims.
9. Will commercial auto insurance cover my tools or cargo?
Not by default. You need to add cargo insurance or inland marine coverage to protect tools, equipment, or goods being transported in your vehicles.
10. What affects the cost of commercial auto insurance?
Your premium depends on factors like:
Working with a broker like Kelstar Insurance can help you compare multiple carriers for the best value.
11. Can I bundle commercial auto with other business insurance policies?
Yes. Many businesses combine auto insurance with general liability, workers’ compensation, or property insurance to simplify billing and reduce total costs.
12. How can Kelstar Insurance help with small fleet coverage?
Kelstar Insurance works with over 50 trusted insurance carriers to help businesses customize the right commercial auto policies. Whether you run a small delivery service, contracting business, or trade operation, we help you find affordable coverage that fits your fleet, risk level, and budget.
This article has been a collaboration between Kelstar Insurance and OpenAI’s ChatGPT. Created on April 18, 2025, it combines AI-generated draft material with Kelstar Insurance's expert revision and oversight, ensuring accuracy and relevance while addressing any AI limitations.