Auto Insurance Basics

Auto insurance policies all have basic types of coverage, often with minimum levels set by the state you live in. Understanding these basics can help you make sure you have carry enough insurance and will help you compare pricing.

Liability Insurance

Almost all states in the US require liability insurance. This coverage will pay for damage done with your vehicle to other people or property. Liability insurance is not used to pay for your injuries, or for those injuries done to any one else on the policy.

A typical insurance policy or quote will list your basic minimum level of liability auto insurance coverage as something like 25/50/10. Every state is allowed to establish its own minimum requirement for liability so it is important to know what it is in your state. While many are 25/50/10, some are 25/40/10, or even 15/30/10.

In 25/50/10 the first number means that any person (besides you) that is injured in an accident that is your fault would receive a maximum $25,000 from the insurance company to cover injuries or items like loss of work. The second number reflects the maximum paid out by the insurance company per accident. So if there are three people in the accident, they wouldn’t each get the individual maximum to pay for their injuries, but would have to split the over all accident maximum of $50,000.

The last number, or $10,000, is the maximum amount paid by the insurance payment for property damage. These numbers are important because if the damage is over the stated coverage amount than you can be sued to pay the difference.

While you have to carry the minimum amount of liability coverage required by your state, you can and maybe should consider carrying more. Some experts suggest carrying liability coverage equal or close to your net worth. Regardless, it is important to check what the different cost would be to add a little more liability to basic coverage.

Collision Insurance

Collision insurance is what will pay to fix your car if it is damaged in an accident with another car or another object while you are driving the car. Typically you will have a deductible, from $100 to even $1000. This means that you pay the deductible amount first before the insurance company covers the rest. On many older cars that wouldn’t be worth fixing the owners may be able to choose not to carry collision insurance.

Comprehensive Insurance

A car accident isn’t the only way a car can be damaged. Hail, floods, fire, theft, etc can all cause damage to a vehicle and require it to be fixed or replaced. Again you will typically have a deductible that you have to pay before the insurance kicks in.

Both collision and comprehensive coverage are required basic coverage if you’re still making payments on the car. If you own the car then it may be a waste of money to keep this type of insurance on older cars. This is especially true if the cost to replace the vehicle is less than a few thousand dollars.

Personal Injury Protection or PIP Insurance

Often this type of basic insurance coverage is called “no-fault” insurance. Some states require PIP. This type of insurance is used to cover your medical costs, and in some cases lost wages, if you are injured in an accident. Some PIP policies will also cover injuries to other passengers in your car, and in some cases pedestrians. Check the policy to see exactly what your PIP basic insurance covers.

Uninsured Motorist Insurance

Even though everyone is required to carry minimum liability coverage, there are some who don’t. Uninsured motorist insurance is intended to cover both you and your passengers if you are hit by an uninsured driver. This part of your policy will also cover those accidents where some one hits you and leaves without exchanging information. This is called a hit-and- run accident.


Auto Insurance policy basics include liability, uninsured motorist, PIP, and sometimes collision and comprehensive coverage. There are many additional things that can be added, such as window glass replacement, towing, and other items.

You can save on your car insurance policy often by just understanding what you need, and getting the basics. In 2008, Consumer Reports suggested that the average American family could save about sixty-five dollars a month by simply getting competitive quotes on their car insurance. They could save further by taking of extras like towing, paying the insurance quarterly, semi-annually, or annually, and even buy thinking ahead and checking insurance quotes on vehicles before you buy. This is recommended as cars have different costs for repair and replacement and the difference in the cost of basic auto insurance can vary greatly between makes and models of cars.

To get free competitive online car insurance quotes from several companies, go here.

Truck Insurance

Unlike insurance coverage on trucks used for personal or recreational purposes, commercial truck insurance can offer unique coverage such as pollution liability, and even options to cover specific regional regulations for business vehicles. Commercial truck insurance can also be referred to as long-haul truck insurance.

Some coverage allows truck owners to base the cost of the policy on mileage or gross business revenues; however this type of pricing might mean that you will pay more for the insurance when business is doing better.

Trucks used for commercial reasons that are used on United States roads are required to be insured with commercial truck insurance. Whether the vehicle is a refrigerated truck, flat bed semi, dump truck, car hauler, or logging truck, it must have a commercial truck policy. The policy may be for owner-operators, or for corporate fleet vehicles.

Commercial truck insurance coverage can be tailor made for small companies and even single trucks. Or a policy can be written to cover large fleets of vehicles that can include commercial vehicles that are leased or subcontracted. It is important to carry this coverage as United States accident statistics show that every sixteen minutes an accident occurs that involves a big truck. These accidents often result in death, injuries, and sometimes include multiple vehicles. In order to protect your business you need to carry commercial truck insurance.

Motor Truck Cargo Insurance

This type of coverage insures what the truck is carrying and not the vehicle or driver. The policy will protect the truck owner, business, or client if the cargo is lost or damaged during transport or while the cargo is stored at a terminal. Often this freight insurance is limited by a maximum load value per vehicle. The cargo is typically appraised prior to shipment in order to assess the specific cost of replacement value in order to fully protect the trucking company or driver from loss liability.

Some motor cargo policies will also cover the cost of storage for the freight if something happens to the truck or there is another reason the cargo can’t be delivered. This option is often called Warehouseman’s legal liability.

Understanding Commercial Truck Insurance Types

Often called semi-truck insurance, commercial truck insurance offers several types of coverage including:

  • Primary Liability Insurance – required by law, businesses or owner operators have to have this type of insurance in order to legally put their truck on the roads. Commercial truck liability insurance covers those who are injured or their property damage because of an accident with the truck where the driver is at fault. US federal law requires $750,000 minimum coverage for each truck driver on the road. If the truck driver is at fault in an accident the policy would cover the amount up to the limit, then the truck driver or company would be liable for additional amounts. Often truck drivers and companies will choose to carry primary liability insurance in an amount that is higher than the minimum limits required.
  • General Liability Insurance – covers incidents that occur when you are not driving, including while stopped at a rest area, when loading or unloading the truck, and theft or vandalism any time the commercial vehicle is parked. The specifics of general liability insurance coverage can fluctuate between different insurance providers. Make sure you don’t make assumptions and know exactly what your policy covers. This type of coverage is typically to cover the truck and contents besides the cargo.
  • Motor Truck Cargo Insurance – protects the actual cargo or freight that is being transported in the commercial truck. While not required by law, your clients may demand that you carry this insurance and that it be at a specific limit before they contract for your services.
  • Non-Trucking Liability Insurance –is often called bobtail or deadhead insurance. This coverage specifically protects your truck while it is stored or parked and empty of cargo when you aren’t working.

There are also other options specifically intended for independent truck drivers operating vehicles they own, lease, or rent. Occupational and Accidental Injury Insurance acts as a type of workman’s compensation for the driver/owner, paying for medical and living expenses if they are hurt on the job.

Driver Requirements for Commercial Truck Insurance

Typically in order to drive and insure a commercial truck the driver must have a CDL or Commercial Driver’s License. Even if the type of vehicle doesn’t require this type of license, insurance carriers have the right to request specific driver requirements in order for the insurance coverage to be valid.

There are federal requirements that the drivers for vehicles over a certain size must have a CDL. For more information on Federal Requirements for long haul trucking see here.

The insurance company can impose additional conditions that may include:

  • Higher age limits than typical licensing requirements
  • Specifying driver history include a set minimum number of years experience driving a truck
  • They can also limit the number of at fault accidents, acceptable moving violations, or major violations that are accrued over a specific number of years


Commercial truck insurance offers several options and types of policies to provide liability coverage for personal injuries and property damages, the loss or damage of the freight you carry, and truck coverage if it is carrying freight, parked at a terminal, or in your driveway.

Small Business Auto Insurance

Small business auto insurance or commercial auto insurance protects your business when you or your employees are out on the road doing company business or anytime they are driving company vehicles. This type of insurance coverage can pay for medical expenses if the driver of a company vehicle is involved in an at fault accident. It may also protect the business by paying for damage to property caused by the driver of a business vehicle or for the medical expenses of those the driver injured in the accident. This is important because if you don’t have enough small business auto insurance to cover the costs of the accident, the business will have to pay the costs.

Not just for accidents and property damage caused by your company vehicles or drivers, business auto insurance coverage may also cover damage to business cars, trucks, or vans that are caused by fire, theft, windstorms, hail, flood, and vandalism.

Small business auto insurance can provide coverage in company provided vehicles, or if your employees drive their own vehicles. Most states require businesses to have some type of commercial auto insurance. Check this interactive state map for the minimum basic auto insurance requirements in each state. The requirements for business liability may be different, but this gives you a starting point.

Why Your Small Business Needs Commercial Auto Insurance

If you lease, own, or rent any type of vehicle for your small business, you need to have small business auto insurance coverage. A commercial auto insurance policy will cover vans, cars, trucks, and any other type of motorized vehicle if it is used in the line of business. Business vehicles are not covered by personal auto insurance, nor are they covered by regular business liability insurance, you have to have a separate auto insurance policy for your small business.

If the business doesn’t own any vehicles, you rarely use your personal vehicle for business, and your employees don’t use there personal vehicles for business use, then you may be able to state on your personal vehicle policy that it is used occasionally for business and not be required to purchase a business auto insurance policy. You should check with the company that insures your personal vehicle to see if your circumstances allow this option.

Another option for small business owners if you have more than two vehicles that are used for business purposes is fleet insurance. This type of coverage is often used by businesses that have multiple vehicles. It can offer options like one deductible for all vehicles instead of a deductible for each individual vehicle. This way if several of your business vehicles are involved in the same accident, you only pay one deductible for the accident.

Cost Effective Tips for Small Business Auto Insurance

In order to find cost effective auto insurance coverage that will protect you or anyone else you permit to use a company car, truck and/or van, you should start buy getting several quotes on the same insurance limits and options from different companies. This part you can probably do online at a commercial insurance comparison website. This will allow you to compare pricing.

Once you’ve narrowed the field to a couple of quotes, talk to the agent or broker about your business specifics and if there are any options you haven’t considered. For instance you may want to provide roadside assistance in order to keep your driver with the vehicle if it breaks down. This can cut down on theft and vandalism of company vehicles.

You will want to ensure that the company you get your small business auto insurance from provides ongoing support so that as your business grows and changes you can keep your coverage up-to-date.


If you have any vehicles titled in the company’s name, or if lease, rent, or use any vehicle regularly for you business, then you should have a small business auto insurance policy. All states require some form of auto insurance and you are mandated by law to carry the required minimum. If you have employees use their own vehicles within the business, say for deliveries, then you should also have a business insurance policy to cover at least the liability of your company if your employee gets into an accident while using their vehicle for business purposes.

Small business auto insurance can cover physical damage to the insured vehicle, property damage done to stationary objects (like a telephone pole), damage done to company vehicles by a variety of causes outside an accident like fire, theft, vandalism, or hail, and even medical coverage for anyone injured in the accident, including the driver. There are also options available like roadside protection.

The cost of your small business insurance policy is determined by a number of factors, use, mileage driven, and the driving record of employed drivers.