Commercial Auto Insurance in California: Costs, Benefits, & Who Needs It?
The state of California has nearly 1.8 million businesses. Most provide services or products in various industries and have specific insurance coverage needs. By law, companies that have business-owned cars must get commercial auto insurance.
Let’s say you own a transportation-based company, and one of your businesses is at fault in an accident. In this case, you could face an expensive lawsuit. So what is commercial auto insurance in California?
Commercial auto insurance in CA covers damages to vehicles or property, medical bills, lost wages, and other related costs. Auto insurance is needed for extra liability protection as long as you utilize company-owned vehicles. Rates may vary from one insurer to the next, so business owners should compare when it comes to commercial auto insurance quotes.
Today, most insurance companies use an independent specialist matching system to get an appropriate insurance plan for their location. All you have to do is be specific with what you are looking for, and this latest technology will suggest the best insurance agency or representatives for you.
Here’s everything you need to know about commercial auto insurance in California.
What Is California Commercial Auto Insurance?
Commercial vehicles include tractor-trailers, construction vehicles, and passenger cars. Whether your company uses trucks, vans, buses, or cars doesn’t matter. Commercial vehicle insurance in California covers the expenses that may arise from an accident involving a business-owned vehicle. If the company owns one of these vehicles, it must be covered by commercial auto insurance in CA.
How Does California Commercial Auto Insurance Work?
In California, all vehicles must have a minimum amount of auto liability coverage, regardless of the type of their use (business or personal). Commercial auto insurance requirements for different types of vehicles will differ as the state of California law mandates. For instance, passenger cars have the same liability minimums as company cars:
- $35,000 for bodily injury in every accident involving two or more injured individuals
- $20,000 for bodily injury per person
- $10,000 in property damage coverage in every accident
Also, large commercial trucks, construction vehicles, semi-trucks, and buses have higher liability insurance requirements based on the factors below.
- The type of cargo the vehicle will transport
- The weight and size of the vehicle
- The vehicle’s passenger capacity if it will be used to transport passengers
- The vehicle’s intended use, such as construction, deliveries, transportation, or interstate commerce
If you’re unsure about the type of liability insurance coverage to carry for your company vehicle, consider getting local insurance professionals. Communicating with them about California commercial auto insurance requirements will increase your chances of acquiring better coverage.
Who Needs Commercial Auto Insurance in California?
Any business in California that uses vehicles for business purposes must have commercial auto insurance. You are covered by your auto insurance while driving to work but not while using it for work-related tasks, such as deliveries or picking up supplies. So whether you own a food truck or a fleet of tractor-trailers, you must carry a commercial auto policy if you use them for work purposes. If you get in an accident and are covered by this policy, the insurance company pays for the medical bills, settlements, and other related costs.
Why Businesses Need California Commercial Auto Insurance?
Commercial auto insurance is needed if a vehicle is used in jobs related to the person’s occupation, business, or profession other than using it for commuting.
- If you need higher limits of liability because of the kind of job you have, a commercial vehicle insurance policy may be appropriate.
- If you are going to use a vehicle to transport people or goods for a fee or use it to perform any industry service, a commercial insurance policy for your vehicle is a must.
- If an employee operates the vehicle or an auto’s ownership is under the name of a partnership or corporation, an insurance commercial auto policy may be needed.
- Towing a trailer or hauling weight in equipment or tools to conduct your business services may also require business insurance policies for a commercial vehicle.
Three Things At Risk Without Commercial Auto Insurance
- None or limited coverage for accidents while handling vehicles for business.
- Paying out expenses for medical payments, injuries, repairs, and more.
- Losing control of your personal or company insurance car coverage.
How Much Does Commercial Auto Insurance in California Cost?
On average, drivers in California pay $2,190 per year or $182 per month for their car insurance costs. The price of the premium varies based on several factors, including:
- The type of car you drive
- The motor vehicle record
- Claims history
- How many miles you drive per year
- Number of vehicles
- Employee driving records
How to Lower the Costs of Commercial Auto Insurance in California?
There are several ways to lower the cost of your commercial auto policy, including:
- Paying your policy in full (instead of monthly)
- Getting a continuous auto insurance
- Asking for a discount
- Getting a commercial driver’s license (CDL)
- Getting higher deductibles
An Example of Commercial Vehicle Insurance in California for Retailers
In California, small businesses pay a premium of $142 per month for commercial vehicle insurance (or $1,704 per year). The premium rates depend on several factors, such as the value of your vehicles and how often they are driven.
Common Professions That Need Commercial Auto Insurance in California
Some professions can especially benefit from having commercial auto insurance in CA, including:
- Pizza deliveries
- Food trucks
Commercial Auto Insurance Coverage In California
There are many coverage options for commercial car insurance in California, but only liability coverage is mandatory for businesses in the state. Since a collision can happen to any company-owned car, it can result in large financial repercussions. It would be best to buy as much coverage as your company can afford. Below are the coverage options.
This coverage provides liability costs if the business owner or the driver is responsible for any injuries or property damage while using a company-owned car. It will cover the legal defense fees and court costs up to the coverage limits.
Liability coverage is required in most US states and is considered the foundation of a commercial insurance auto policy. If an accident happens and you are at fault, this coverage will pay for the property damage expenses and bodily injury caused to third parties. It will also pay for the injured parties’ legal bills, medical payments, and lost wages. When it comes to property damage, this coverage will pay for replacing and repairing things that are wrecked. In some instances, the third party may sue you to demand pain and suffering damages.
Regardless of fault, collision coverage will compensate for the amount associated with replacing or repairing your business vehicle under collision-related damages.
Usually, you can’t collect any actual amount for the cash value of your car. It is not the same as the vehicle’s repair and replacement cost. Normally, collision coverage is the most expensive component of vehicle insurance. You can retain your premium amount by acquiring a higher deductible, like $300 or even $600. But remember that you should pay the price of your deductibles before the business insurance company requires cash after the accident. An insurance company will get the total payment for your business car repairs and assess if the company will pay an excessive amount compared to the vehicle’s worth.
Medical Expenses and Payments Coverage
This company insurance for vehicles covers medical expenses if an authorized driver or passenger suffers severe injuries in an auto collision. It only applies if the vehicle is business owned, regardless of fault.
After a vehicle-related collision, expenses can arise from any accidents while driving your vehicle or driving someone’s car. From the injuries you and any of your passengers will incur. Medical payment coverage will compensate regardless of who’s at fault. But sometimes, if someone is liable for the accident, your business insurance company may advise recouping their payments.
Comprehensive Insurance Coverage
It pays you for any amount associated with major replacement or repair of your business vehicle that damages non-collision and non-related events like theft, fire, falling objects, flood, or vandalism. This coverage comes with deductibles, and the carrier will pay for the amount of the car’s worth at the time of damage.
Bobtail coverage will cover the tractors when you use them without towing the trailer. Typically, the coverage is valid when the vehicle is used for work or non-work-related reasons.
Loading and Unloading Coverage
It provides coverage for merchandise, equipment, materials, or products while loading or unloading these items for transport purposes, resulting in damages.
Labor and Towing Coverage
This business insurance coverage for cars is specific for roadside assistance if your business-owned or even non-owned vehicle becomes non-operational while on the road.
This coverage option is not required for all companies, so they don’t need to purchase it. For instance, a pizza restaurant using a delivery vehicle doesn’t need to acquire labor and towing insurance. On the other hand, the manufacturing business industry that utilizes company-owned cars doesn’t need non-owned auto coverage.
Uninsured/Underinsured Motorist Insurance
This business car insurance coverage covers the amount associated with property damage and personal injuries to your company car if the responsible individual lacks insurance to cover the damages.
UIM or underinsured motorist coverage will compensate if the driver who causes the hit causes more damage than their liability coverage. In other states, UIM or UM coverage will pay for the property damage caused by accident. Regardless of the driver’s nationality, given the uninsured party’s prevalence, this coverage is vital. This insurance costs less than $50 a year for $110,000 worth on the average note. It will compensate for anything that any medical insurance does not cover.
Why Choose East Insurance Group?
Finally, you can customize your commercial auto insurance policy to meet your specific business needs. When looking for better quotes, it would be advantageous to ask for advice and help from a reliable and trusted insurance specialist in California, such as East Insurance Group. We offer our insurance services in many cities in California, including:
- San Diego
- Los Angeles
- San Jose
Our professional representatives can provide excellent answers to your insurance-related questions. We can evaluate your coverage needs and get various competitive pricing for quality commercial auto policies. Connect with EIG today.
What Is the Difference Between Commercial and Business Auto Insurance?
Business auto insurance in California covers vehicles used for trips in regular traffic. On the other hand, commercial auto insurance covers vehicles used for business purposes and are usually designed for specific jobs.
Is Insurance Higher for Commercial Vehicles?
Usually, a commercial auto policy costs more than personal auto insurance. This is because commercial auto policies have higher limits and need to cover more in case of an accident. On the other hand, personal auto policies cover one person driving their own car.
What If I Use My Personal Vehicle for Work?
If you use your personal vehicle for work, your personal auto insurance policy can cover the damages in case of an accident. However, if the damages exceed your personal policy limits, you may be responsible for the additional costs that can be very expensive. Hired and non-owned auto insurance cover liability and medical payments for the vehicles you have rented or leased to use for business purposes.
Is Commercial Auto Insurance Required in California?
California commercial auto insurance requirements are simple: any organization in California that uses vehicles for business purposes must have commercial auto insurance.
Are you still confused about commercial auto insurance in California, or do you need some help with getting a quote for your business? Contact us today and get all the information you need fast and for free!
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