Many small business owners misunderstand what commercial auto insurance is for, when they need it, and what it costs. (Adobe Stock)
Commercial auto insurance has always been important, but it’s becoming more expensive and harder to ignore.
The severity of commercial auto claims jumped 78% between 2014 and 2023, according to the Insurance Information Institute. That means when an accident happens, it’s not just inconvenient — it can be financially disruptive.
Yet many small business owners might misunderstand what commercial auto insurance is for, when they need it, and what it actually costs. Some may think their personal policy has them covered. Others may assume commercial coverage is out of reach or don’t realize that even a single work vehicle can carry real risk.
Insurance agents can play a critical role in helping clients understand where their coverage may fall short — often before they realize the risk themselves. Below are four common misconceptions about commercial auto insurance, along with practical ways to address them in client conversations.
No. 1: “My personal auto policy will cover business use.”
In most cases, it won’t. Most personal auto policies specifically exclude coverage when a vehicle is being used for business purposes. That includes making deliveries, transporting equipment, or driving to a job site. If an accident happens during work-related use, the claim could be denied. There are additional considerations if employees are using their vehicles. A business will certainly be pulled into a lawsuit if an employee causes damage or injures someone while using their vehicle for business purposes.
The National Association of Insurance Commissioners (NAIC) warns consumers about this exact issue. A personal policy may seem convenient, but it can leave business owners exposed to vehicle repairs, medical bills, and liability claims they weren’t expecting.
Tip for agents: Ask clients directly: “Do you or your employees ever use a personal vehicle for work purposes?” Even occasional use can trigger exclusions. Use real-world examples to show how quickly this risk becomes reality.
No. 2: “Commercial auto insurance is too expensive.”
The perception of high cost often stops business owners from even considering a commercial auto policy. The reality is that premiums vary widely based on factors like vehicle type, radius of operations, usage, and garaging location, and the cost of not having insurance can often be much higher.
According to NAIC data, the average commercial auto liability premium in 2022 was around $1,700 per vehicle per year and many businesses pay significantly less. When compared to the potential out-of-pocket costs of an accident, coverage is often more affordable than clients realize.
Tip for agents: Break down a sample quote and walk clients through the factors that impact pricing — like vehicle type, radius, and where it is garaged. Highlight that expenses from an uninsured accident, especially those involving injuries or legal action, can quickly add up to many thousands of dollars — far exceeding the annual premium.
No. 3: “I only have one vehicle. Do I really need a policy?”
Yes, just one vehicle is enough to create serious exposure. Whether it’s a catering van, a contractor’s pickup truck, or even a personal car occasionally used for business, a single accident can lead to costly repairs, medical bills, and legal complications.
Many small businesses assume they’re too small to face major risk, but the reality is often the opposite. Without commercial auto insurance, even a minor crash could disrupt operations and strain financial resources. According to the Insurance Information Institute, rising claim severity in commercial auto is being driven by factors like medical inflation, legal expenses, and increased repair costs due to vehicle technology— all of which increase the financial impact of accidents.
Tip for agents: Emphasize that business size doesn’t reduce risk. Use relatable scenarios, like fender benders on the way to a client meeting or damage during a supply run, to show how everyday driving can carry real financial consequences. Tailoring examples to their industry can make the risk feel even more relevant.
No. 4: “All commercial auto policies are the same.”
One of the biggest strengths of commercial auto insurance is how customizable it can be. Coverage options include liability for autos whether they are owned, rented, or leased and can even extend to offering protection for your business due to claims involving employee-owned vehicles. Additionally, there are many options for physical damage , medical payments, uninsured/underinsured motorist protection, and more. Businesses can tailor coverage to fit their exact needs, budget, and vehicle use. Helping clients understand that flexibility makes a policy more efficient, and more cost-effective, goes a long way in addressing hesitation.
Tip for agents: Offer side-by-side coverage scenarios based on the client’s business type. Show how a custom policy avoids overpaying for coverage they don’t need while closing real gaps in protection.
Why this matters now
Small businesses continue to navigate rising operational costs, ongoing supply chain pressure, and staffing challenges. The last thing they need is an unexpected vehicle accident turning into a financial crisis. Commercial auto insurance is one of the most practical, proactive steps they can take to protect their business. In fact, they may even be able to save on costs by working with their agents to shop around for commercial insurance, similar to what they would do for their personal insurance.
Agents and brokers can play a crucial role in clearing up confusion, correcting assumptions, and guiding clients to the right-fit coverage. A short conversation today could prevent a long road to recovery tomorrow.
Mike Hickey is director of Commercial Auto for Pie insurance.
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