If you operate vehicles for your business in California, having the right insurance isn’t just smart, it’s the law. There are over 27.7 million licensed drivers in the state. Major metro areas like Los Angeles have over 6.7 million drivers.
This means the risk of accidents is high. The right coverage protects your company from costly financial setbacks if something goes wrong on the road.
Starting in 2025, California raised its minimum liability limits, making now the perfect time to review your policy. In this guide, we will discuss who needs commercial auto insurance. We will also cover the new minimum requirements and extra coverage options.
Who Needs Commercial Auto Insurance?
If you use a vehicle for work, even part-time—you probably need commercial auto insurance. This includes:
- Delivery vans and trucks for goods or packages
- Contractor vehicles carrying tools or equipment
- Service vehicles like plumbing or electrical vans
If you use your personal car for work, your regular auto insurance might not cover accidents. That could leave you paying for repairs or injuries yourself. To avoid surprises, check with your insurance agent—it’s a quick step that can save you a lot of trouble later.
Minimum Liability Coverage & 2025 Updates
California law sets minimum coverage limits for every vehicle:
- $30,000 for injury or death to one person
- $60,000 for injury or death to more than one person
- $15,000 for property damage
Starting January 2025, these limits doubled under the Protect California Drivers Act. If your policy hasn’t been updated, you could face fines, DMV suspensions, or even have your vehicle impounded. Plus, if you cause an accident and your coverage is too low, you’ll pay the difference yourself. That’s why reviewing your policy now is so important.
Extra Rules for Certain Businesses in California
If you operate trucks or move goods across state lines, you must go beyond basic coverage. Here’s what’s required specifically in California:
· CHP & DMV Filings - Obtain a California Carrier Identification (CA#) and a Motor Carrier Property Permit (MCP) through the California Highway Patrol (CHP) and DMV—mandatory for vehicles over 10,000 lbs, hazardous materials, or CDL‑required operations. Maintain up-to-date CHP terminal inspections and compliance under the Biennial Inspection of Terminals (BIT) program.
· Higher Liability Limits for Interstate Trips - In California, the federal minimum liability for interstate freight is $750,000 for non-hazardous cargo and goes up to $5 million for hazardous cargo. Intrastate carriers in California may also need elevated limits—typically $300,000–$1 million+, depending on vehicle size and cargo.
· Federal Endorsements & Filings - Interstate carriers must file Form MCS-90. This is a federal endorsement. It ensures your insurer will cover claims up to the required limit, even if your policy does not include them.
· Consequences of Non-Compliance - Skipping these steps can lead to big problems—like expensive fines, delays in getting your trucks on the road, or even losing your permits. Both California agencies (DMV and CHP) and federal regulators (FMCSA) enforce these rules.
Optional—but Smart—Coverages for commercial auto insurance in California
Meeting the state’s minimum liability requirements is just the beginning. If you want real peace of mind, consider additional insurance that can protect your business from costly surprises:
- Uninsured/Underinsured Motorist Coverage -What if the other driver doesn’t have enough insurance—or any at all? This coverage steps in to ensure you don’t pay the bill.
- Hired & Non-Owned Auto- Do your employees use their own cars or rental vehicles for work? This coverage protects your business if something happens while they’re on the job.
- Comprehensive and Collision -Accidents, theft, storms—life happens. These coverages help repair or replace your vehicles so you can keep moving forward. If you have a lien on your loan, the lender may require these. This protects their investment until you pay off the vehicle.
- Workers’ Compensation & General Liability - Injuries and third-party claims can derail a project fast. Contractors often require these separate coverages, which provide essential protection for your team and your business.
Adding these options isn’t just smart—it could save your business thousands when the unexpected happens.
How to Stay Compliant in California
Staying compliant isn’t just about having insurance—it’s about meeting California’s strict commercial vehicle requirements. Here’s what you need to do:
- Keep Proof of Insurance in Every Vehicle- CHP officers and DMV inspectors can request documentation at any time. Make sure your certificate of insurance and MCP permit are easily accessible.
- Ensure Your Insurer Files Coverage with the DMV- California law requires your insurance company to send proof of coverage (Form MC‑65) directly to the DMV when you apply for a Motor Carrier Property Permit (MCP). This is done electronically. If your insurer doesn’t file it, the DMV won’t issue or renew your MCP—and you can’t operate legally
- Review Your Policy Annually - Update coverage after adding vehicles, drivers, or changing routes. California’s minimum liability limits increased in 2025, so confirm your policy meets the new standards.
Stay Current on CHP and DMV Requirements
Compliance includes maintaining your CA# and passing Biennial Inspection of Terminals (BIT) checks. These inspections verify vehicle safety and recordkeeping.
Why Should Small Businesses Review Coverage Now?
With limits doubling in 2025 and accident costs rising, old policies can leave dangerous gaps. A quick review now means peace of mind and may help avoid expensive surprises later. For small businesses, one uncovered claim could be a major financial hit.
How Milepost Insurance Helps
Milepost Insurance was founded as an agency dedicated to helping small businesses attain commercial vehicle insurance coverage from top rated carriers.
Our expertise helps make compliance simple:
- Monitor renewals to meet California’s updated minimums.
- Help handle required filings for you and provide you documents and certificates as needed.
- Offer bundled solutions for auto, liability, and workers’ comp.
Conclusion
California’s commercial auto insurance rules are strict—and getting stricter. Don’t risk gaps in coverage. Schedule a compliance review with Milepost today and keep your business moving forward.
