What Does Commercial Auto Insurance Cost?

Today we’re going to discuss the cost of commercial auto insurance, what impacts the rates, and what you should look out for.

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Commercial auto insurance is a liability and physical damage policy for vehicles, such as cars, trucks, and vans, that are used for business. Commercial vehicles require a separate policy because they’re typically exposed to more risk compared to personal vehicles.

Commercial Auto Rating Factors

When it comes to commercial auto pricing there are a ton of factors that come into play such as:

  • The location of where your vehicles are garaged
  • The total gross vehicle weight
  • The driving record of your employees operating these vehicles
  • Your claims history
  • The type of business that you operate
  • The liability limit and coverage options that you choose

The gross vehicle weight of the commercial vehicle you own will play a major role in determining your commercial auto insurance premiums. Lighter vehicles (usually those under 10,000 pounds) like a Ford Econoline, receive the most competitive rates, heavier vehicles those over 10,000 and 20,000 pounds receive higher rates. 

This is mainly because when larger vehicles collide with smaller ones the smaller car is often left severely damaged and its occupants with severe injuries, while the larger vehicle better protects its occupants.

Employees Driving Your Commercial Vehicles

You and your employees driving records play a colossal role in not only the cost of your commercial auto insurance but also the carriers that will be available to you (which will also affect the premiums).

A business owner that has employees with a poor driving history may not have the same carrier selection as a business owner that has employees with a favorable history. As you can see this can put your company at a major disadvantage because now you are paying more compared to your peer group for the same line of coverage.

To help assist with employee driving records we always recommend that your broker help you implement things like a driving record review process, an incident reporting procedure, and driving safety reviews (that’s at a minimum). 

Commercial Vehicle Class Rating

One thing that’s different from personal auto insurance to commercial auto is the fact that commercial vehicles are assigned a “class rating”. This means that depending on how the vehicles are used will determine the class rating that gets assigned to your policy.

For example, a contractor who visits 1-2 job sites per day may be assigned a “service” class which is the least expensive commercial auto class code. Whereas a residential delivery driver that stops at several locations a day may be assigned the retail class code which is the most expensive. 

I know there’s a lot here however we really just scratched the surface when it comes to commercial auto insurance. If you are interested in learning more about this or if you’re interested in looking for a new policy then I would encourage you to reach out to us today via the form below and take care.

Please complete the form below for a quote.

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Are you ready to save time, aggravation, and money? The team at LAF Advisers is here and ready to make the process as painless as possible. We look forward to meeting you!

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