Introduction
Buying commercial auto insurance might seem straightforward, but for small business owners, it’s easy to make costly mistakes. Whether you’re operating a single delivery van or managing a small fleet, choosing the right coverage is critical to protecting your business, your assets, and your livelihood. In this article, we’ll walk through five common mistakes small businesses make when buying commercial auto insurance — and how to avoid them.
Mistake 1: Not Understanding Coverage Needs
One of the most frequent missteps is assuming that personal auto insurance will cover business use. In most cases, it won’t. Commercial auto insurance is designed to protect vehicles used for business purposes — whether that’s transporting goods, visiting clients, or hauling equipment.
Real-life example: A landscaping business owner used a personal truck for hauling equipment. After an accident, the personal auto insurer denied the claim because the vehicle was being used for business purposes. The owner had to pay for repairs out of pocket.
Key coverages to consider include:
· Liability coverage: Protects against damage or injury caused to others.
· Physical damage coverage: Covers repairs or replacement of your vehicle.
· Uninsured/underinsured motorist coverage: Helps if the other driver doesn’t have enough insurance.
Tailoring your policy to your business’s specific risks is essential.
Mistake 2: Choosing Based on Price Alone
It’s tempting to go with the cheapest quote, but that can backfire. Lower premiums often mean less coverage — and higher out-of-pocket costs when something goes wrong. It’s also important to consider the insurer’s financial strength and claims reputation.
Real-life example: A courier service chose the lowest-cost policy without reviewing coverage limits. When a driver caused a multi-vehicle accident, the liability coverage wasn’t enough to cover damages, and the business had to pay the difference.
Look for:
· Comprehensive coverage that matches your risk profile
· Strong financial ratings (e.g., AM Best)
· Responsive claims service
Value matters more than price when your business is on the line.
Mistake 3: Overlooking Other Essential Business Coverages Like Workers’ Compensation and General Liability
Commercial auto insurance is just one piece of the puzzle. Many small business owners skip over other critical policies — especially if they’re sole proprietors or trying to cut costs.
Real-life example: A self-employed handyman slipped off a ladder while loading tools into his van. His health insurance denied the claim because the injury occurred during work.
Without workers’ comp, he had no coverage for lost income or medical bills.
· Workers’ compensation insurance: Even if optional, it can cover medical bills and lost income from work-related injuries. Health insurance often excludes these.
· General liability insurance: Protects against third-party claims like customer injuries or property damage.
Milepost can assist with coordinating these coverages to help ensure your business is fully protected.
Mistake 4: Not Comparing Quotes from Specialized Providers
Not all insurance providers understand the needs of small fleets. Some may offer generic policies that don’t reflect your business’s unique risks.
Real-life example: A mobile pet grooming business received a quote from a general insurer that didn’t include coverage for equipment stored in the van. A specialized provider later offered a policy that covered both the vehicle and the equipment.
Working with a specialized agency like Milepost means:
· Access to carriers that focus on commercial auto insurance
· Tailored coverage options for small fleets
· Expert guidance from agents who know your industry
Don’t settle for the first quote — shop smart.
Mistake 5: Failing to Review Policies Annually
Your business isn’t static — and your insurance shouldn’t be either. Adding vehicles, hiring drivers, or changing operations can all impact your coverage needs.
Real-life example: A catering company added two vans and a part-time driver but didn’t update their policy. When the new driver was involved in an accident, the claim was delayed due to missing documentation and coverage gaps.
Annual reviews help you:
· Identify gaps or overlaps in coverage
· Adjust limits based on growth
· Ensure compliance with state regulations
Milepost makes it easy to keep your policy up to date.
Conclusion
Avoiding these five mistakes can save your business time, money, and stress. Commercial auto insurance is a vital part of your risk management strategy — but it works best when it’s tailored to your needs and supported by the right partners.
· Ready to protect your business the right way? Talk to a Milepost advisor or start your insurance quote for small business online today.
