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The median cost of commercial auto insurance is $142 per month, according to Insureon, a marketplace for small-business insurance. But 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.
Factors that influence the cost of commercial car insurance
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.
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.
“The main thing they are looking at is the frequency of accidents,” says Steve Compton, an independent insurance broker for over 17 years, based in Georgia and licensed in eight states. “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 and frequency of use
A policy for a for-hire trucker will cost more than a policy for a local real estate agent driving to and from the office and showing 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 driving record for anyone driving on behalf of a business is taken into consideration when determining the policy rate. The more accidents, claims and moving violations a driver has, the more expensive your commercial auto insurance policy will be.
Your company's credit score and the primary business owner’s credit score are also considered when pricing a commercial policy in some states. A lower credit score is seen as a greater risk, causing the cost of coverage to increase.
How to get cheap commercial auto insurance
Maintaining a clean driving record is the best way to keep the cost of your commercial car insurance low. Even one driver on your company’s policy with an accident or moving violation will increase your business’s rates.
You can also save by taking the following steps:
Get multiple quotes. Reach out to a variety of insurance providers and brokers to get multiple quotes and compare providers and coverage limits.
Work with an experienced agent. The right agent can make sure you have the proper coverage level for your business needs, especially if you need specialty coverage like tow truck insurance.
Bundle your coverage. You can typically get a discounted rate if you package commercial car insurance with other business insurance policies or a personal auto coverage.
Use telematics. Allowing an app or plug-in device to record detailed information about your driving habits — like how fast and far you drive, and how often you brake — can help lower your rate, assuming you and your employees practice good driving habits.
Prepay your annual premium. Some popular providers will knock up to 15% off your premium if you pay it in a lump sum instead of monthly installments.
Adjust your deductibles. Opting for a higher deductible can lower your commercial auto insurance premium. Just make sure you can afford to pay the deductible if you need to make a claim.