What are your state’s requirements for commercial auto insurance coverage? Learn what you and your business need to do to avoid penalties.
Written By: Mark Fairlie Senior Analyst & Expert on Business Ownership Verified Check Verified Check Editor VerifiedA business.com editor verified this analysis to ensure it meets our standards for accuracy, expertise and integrity.
Managing Editor & Expert on Business Ownership Table Of Contents IconIf your company uses vehicles for work, commercial auto insurance is one of the most critical business insurance policies to obtain. As with personal vehicles, commercial vehicles are required to carry a minimum amount of insurance. If you’re driving without the appropriate insurance, you could be ticketed and fined ― not to mention inadequately covered if there’s an accident and someone files a claim.
Here’s what you need to know about the legalities of commercial auto insurance and what your state requires.
Every state has its own auto insurance requirements for commercial vehicles. In a few cases, you’ll see the same minimum requirements as there are for personal vehicles but, for the most part, commercial limits are higher than personal limits.
Remember that the state requirement is the minimum amount the state mandates you carry. It’s critical to discuss your coverage with your insurance agent to make sure you have enough coverage since many business owners would be subject to lawsuits if they’re not appropriately insured.
FYI Did you knowMany of the best general liability insurance providers have their own minimum coverage limits for commercial auto insurance, which may be higher than state limits.
As well as complying with the law, a commercial auto policy provides the following benefits:
The type of vehicle you have may impact a state’s commercial auto insurance requirements. Passenger vehicles usually have one type of requirement while freight and cargo vehicles have another. You’ll be subject to stricter requirements in most states if you transport hazardous materials.
Please scroll down to see how the rules apply to you. Below are details of the commercial and personal car insurance laws for each state.
Bottom Line Bottom lineInsurance is a deductible expense for tax purposes if yours is a for-profit business except for disability insurance. Hire an accountant to make sure that you’re taking advantage of as many allowances as possible to reduce your tax bill.
If you transport people or materials across state lines, your state insurance goes with you. In most instances, if the state limits where the car is registered are less than the state limits where you’ll be driving, the insurance carrier will match the limits so you meet the legal requirements.
Some states have interstate coverage requirements you must meet if you cross state borders when transporting people or goods. Make sure to stay within coverage territories and note that limits may change once you drive into Mexico or Canada.
Did You Know? Did you knowCommercial auto insurance doesn’t cover medical expenses if an employee gets hurt while driving. You’ll need workers’ compensation insurance for your employees’ medical expenses.
The average annual cost of auto insurance is around $1,750. The actual amount you’ll pay will depend on several factors, including your coverage limit, your industry, the level of vehicle use and how many claims you’ve made in the past.
Contactors, vehicle hire businesses and tow truck operators should expect to pay substantially more.
You can reduce premium costs with a higher commercial auto deductible. This means that if one of your vehicles is involved in a crash, you get smaller payouts for your insurer.
Tip Bottom lineMany insurers offer a further deduction in your premiums if you subscribe to a top GPS fleet tracking system that monitors vehicle speed and driver behavior. The use of telematics platforms like these can reduce your overall fleet running costs substantially.
There are two different ways that states can require coverage.
Per person, per accident and property damage
The first coverage type sets per person, per accident and property damage individual limits. When reviewing your coverage limits in this scenario, you may see three numbers representing your total coverage, similar to your personal auto insurance. Each number covers an accident differently. For example, you might see coverage limits that look like this: 25/50/10. Those numbers represent dollar amounts multiplied by 1,000:
In the second type of coverage requirement, the amount of coverage is listed as a single limit, known as a CSL. This is the most an insurance company will pay per accident.
Take a look at your state’s requirements in the compilation below.
In Alabama, the minimum liability coverage for commercial auto policies is 25/50/25.
If your vehicle has a United States Department of Transportation (USDOT) or motor carrier (MC) number, you’ll need extra insurance coverage. Semi-trucks and other large vehicles traveling between states usually require at least $750,000 in CSL coverage to meet Federal Motor Carrier Safety Administration (FMCSA) rules.
If you’re operating a passenger-carrying vehicle in Alabama, your insurance requirements are:
Nonhazardous property carriers in Alabama must have a liability coverage of 100/300/50.
Alaska requires all commercial auto policies to have a minimum liability limit of 50/100/25.
Passenger-carrying vehicles need insurance with bodily injury coverage of $500,000 and property damage coverage of $200,000.
Insurance policies for property carriers in the state are $500,000 of bodily injury coverage and $200,000 of property damage coverage.
The minimum liability limit for commercial auto policies in Arizona is set at a 25/50/15 split.
If you’re transporting passengers in Arizona, these are your minimum insurance coverage levels:
For vehicles transporting property or nonhazardous materials, the minimum insurance levels are:
If you’re transporting hazardous material, you need insurance with a $1 million CSL or a $5 million CSL, depending on the substance.
Arkansas’s commercial auto policy minimum liability limit is 25/50/25. If you lease or finance a vehicle in the state, you typically must have collision and comprehensive insurance to protect the vehicle.
If you provide passenger transportation services, the following are the minimum insurance criteria:
For vehicles carrying property and nonhazardous transport vehicles, the minimum liability coverage is 50/100/30.
If transporting hazardous material, you’ll need coverage of between $1 million to $5 million, depending on the materials you’re carrying.
California has a minimum liability limit of 15/30/5 on commercial auto policies. Vehicles with a USDOT or MC number crossing state lines must have a CSL of no less than $750,000.
Passenger-carrying transport operators need to insure to the following minimums:
Businesses transporting property or nonhazardous goods by vehicle must comply with these requirements:
For intrastate motor carriers transporting petroleum/waste petroleum products, you must have minimum insurance of 500/1,000/200 (other than property being transported) or a $1.2 million CSL.
Hazardous substance carriers are subject to federal regulations that require a $1 million or $5 million CSL depending on what’s being transported.
In Colorado, the minimum liability coverage is 25/50/15. Vehicles with a USDOT or MC number operating across state lines must have at least $750,000 in CSL coverage under FMCSA rules.
If you transport passengers in the state, your insurance policy minimums are:
The rules regarding common and contract carriers and limited regulation carrier vehicles transporting property and nonhazardous goods are:
Property carrier requirements are:
In Connecticut, the minimum liability coverage for commercial auto policies is a 25/50/25 split. The state also requires that you have UM and UIM coverage.
If you operate passenger-carrying vehicles in the state, your minimum insurance requirements are:
For livery transport:
Vehicles used to transport property require the following minimum levels of insurance:
Delaware law requires that commercial auto policies have a minimum liability limit of 25/50/10. As a “no-fault state,” your insurance company will pay a portion of your damages through your mandatory personal injury protection (PIP) coverage, regardless of fault. However, you can still sue if your medical expenses exceed a certain amount.
If you’re transporting passengers, your vehicles must have the following minimum insurance:
The requirements for vehicles carrying property and nonhazardous transport are:
For hazardous material transport in Delaware, you need coverage of a $1 million or $5 million CSL, depending on the substance.
Florida’s minimum liability limits are a 10/20/10 split. The state also requires you to have a PIP of $10,000.
Nonpublic sector buses in Florida are required to have a minimum liability coverage of $300,000 as a CSL or 100/300/50 or as a split liability policy.
The requirements for property carriers in Florida are based on vehicle weight:
Georgia mandates a minimum liability limit on all commercial auto policies of 25/50/25.
Passenger transportation providers are required to vehicle insurance with the following minimum split liabilities.
Intrastate motor carriers in Georgia need to take out split liability insurance with minimums of 100/300/50.
Hawaii’s split liability minimums on commercial auto policies are 20/40/10. You’ll also need to take out PIP coverage if you drive in the state.
If you operate passenger-carrying vehicles on the islands, your insurance minimums are:
Property carriers in Hawaii must have a liability coverage of at least 250/750/250.
The minimum liability limit for commercial auto policies in Idaho is 25/50/15. There is a requirement to take out UM and UIM coverage but you can opt out of this in writing.
Passenger transportation companies are required by law to take out insurance with the following minimum liability coverage:
For property carriers carrying nonhazardous materials, you’ll need a minimum of $750,000 CSL. For hazardous substance carriers in Idaho, you’re required to insure your vehicles to $1 million or $5 million as a CSL, depending on what you’re transporting.
Illinois commercial auto policies law requires a minimum liability limit coverage of 25/50/20. The state also requires you to take out UM bodily injury and UIM insurance.
If you’re transporting passengers in the state, your liability minimums are:
Property and nonhazardous goods transport operators have the following minimum limits:
For hazardous substance carriers in Illinois, you’ll need a CSL policy of $1 million or $5 million, depending on the materials you’re transporting.
Indiana requires all commercial auto policies to have a minimum liability limit of 25/50/25. There is mandatory UM and UIM coverage in the state but you can opt out of it.
Passenger transport companies must take on liability insurance on their vehicles with these minimums:
Insurance requirements for vehicles carrying property and nonhazardous goods are:
For hazardous substance carriers, the required minimum coverage is $1 million or $5 million as a CSL, depending on the substance.
In Iowa, the minimum liability coverage for commercial auto policies is a 20/40/15 split.
Passenger transport operators need to take out insurance on their vehicles with the following minimum liability levels:
Property and nonhazardous transport vehicles in Iowa have these requirements:
For hazardous substance carriers, you need liability coverage of $1 million or $5 million as a CSL, depending on the substance being transported.
Kansas commercial auto policies are set at minimum liability limit levels of 25/50/25. You’ll also need to take out PIP, UM and UIM coverages.
If you use vehicles to transport passengers or property, your insurance levels must be at least 100/300/50.
The minimum liability limit for commercial auto policies in Kentucky is 25/50/25 split and you’ll need PIP coverage.
Passenger-carrying vehicles in Kentucky have the following split liability minimums:
Vehicles used for property and nonhazardous transport in Kentucky must meet these requirements:
In Kentucky, motor carriers transporting less than 10,000 pounds of petroleum and petroleum products need 100/300/50 minimum coverage on their policies. Those carrying other hazardous materials require a $1 million CSL.
Louisiana mandates a minimum liability limit of 15/30/25 on commercial auto insurance policies. Interstate semi-trucks and other large vehicles with a USDOT or MC number are required to have insurance with a minimum CSL of $750,000.
For passenger-carrying vehicles (including buses) and trucks, the insurance liability minimum requirement is 250/500/10. Tow trucks or wreckers in Louisiana require a $500,000 CSL.
Maine’s minimum insurance liability limits are 50/100/25. You also need to take out UM, UIM and medical payments coverage.
Passenger-carrying transport operators have the following requirements:
If you carry interstate passengers, you’ll need:
If you’re transporting property or nonhazardous goods, your minimum insurance limits are:
Maryland commercial auto policies have a minimum liability limit of 30/60/15 with a requirement to take out UM coverage.
The state requires all passenger transportation providers to meet the following criteria:
Vehicles carrying hazardous materials need insurance with a CSL of $1 million or $5 million, depending on the materials being transported.
In Massachusetts, the split is 20/40/5 split and drivers are required to take out PIP and UM coverage.
Passenger-carrying vehicle operators require insurance that complies with the following minimums:
For vehicles carrying property and nonhazardous goods, you’ll need:
For hazardous substance carriers, the required minimum coverage is a $1 million or $5 million CSL, depending on the substance you’re transporting.
Michigan commercial auto policies have minimum liability limits of 50/100/25. Drivers also must take out PIP, property protection insurance and residual liability insurance.
Passenger transportation companies in Michigan must meet the following minimal coverages:
For vehicles transporting property or nonhazardous goods, the requirements are:
Freight vehicles in Michigan, regardless of weight, require a $1 million CSL if they’re transporting hazardous materials.
Minnesota has a 30/60/10 split and requires drivers to take out a minimum of $40,000 in PIP as well as UM and UIM insurance.
If you’re transporting passengers, your vehicles will need to be insured to the following minimums:
Nonhazardous transport vehicles must be insured to a minimum of 100/300/50. For vehicles carrying hazardous materials, you’ll need a CSL of $1 million or $5 million, depending on what you’re transporting.
Mississippi’s minimum liability limits are 25/50/25 for commercial auto insurance.
If you provide passenger transportation in Mississippi, your insurance requirements are:
Vehicles carrying property and nonhazardous goods have the following minimum insurance requirements:
For vehicles carrying hazardous substances, you’re required to have a $1 million or $5 million CSL policy, depending on the substance being transported.
Passenger-carrying transport operations in Missouri must meet the following minimum insurance requirements:
For vehicles carrying property and nonhazardous goods, the requirements are:
For hazardous substance carriers in Missouri, your required minimum coverage level is a $1 million or $5 million CSL policy, depending on the substance.
Learn more about Missouri’s transport and tow truck laws.
Montana’s minimum liability limit for commercial auto insurance is 25/50/20.
For companies operating passenger-carrying transport, your insurance will need to be at least:
For companies transporting property and nonhazardous goods, your requirements are:
For tow trucks, you’ll need:
In Nebraska, the minimum liability coverage for commercial auto policies is 25/50/25 with a requirement that you also take out UM and UIM coverage.
Nebraskan passenger transport company vehicles require coverage of at least:
Carriers of household goods (group 2) must have CSL liability coverage of $750,000.
In Nevada, the minimum liability coverage for commercial auto policies is a 25/50/20 split.
If you use your vehicles to transport passengers, they must be insured to the following minimum levels:
For vehicles transporting property or nonhazardous materials, your requirements are:
For hazardous property carriers in Nevada, the required coverage is either 300/2,500/1,000 or 300/2,500/5,000, depending on the specifics of the materials being transported.
New Hampshire commercial auto policies have a legal minimum liability limit of 25/50/25. You’re also required to take out UM and UIM insurance.
Passenger-carrying vehicle split liability insurance policy minimums are:
For vehicles used to transport property and nonhazardous, the minimum levels of insurance are:
Hazardous substance vehicles require a policy with a $1 million or $5 million CSL, depending on the substance.
The minimum liability limit on New Jersey commercial auto insurance policies is 15/30/5 with a requirement to take out PIP coverage.
Passenger transportation providers’ insurance liability minimums are:
Tow truck insurance requirements are based on their GVW:
Learn more about New Jersey’s motor vehicle law.
The minimum liability limit for commercial auto policies in New Mexico is 25/50/10.
Passenger-carrying vehicles in New Mexico are subject to the following insurance liability minimums:
For vehicles transporting property or nonhazardous goods, the requirements are:
For hazardous material transport in New Mexico, the required coverage is $5 million.
New York requires all commercial auto policies to have a minimum liability limit of 25/50/10. They also require you to take out a minimum of $50,000 in basic PIP as well as UM coverage.
Passenger transportation providers in New York must insure their vehicles to these minimums:
Liability coverage on insurance policies taken out by common and contract motor carriers of property must be at least 100/300/50.
For hazardous materials carriers, you’ll need a policy that includes a $1 million or $5 million CSL, depending on what you’re transporting.
The minimum liability limits on North Carolina commercial auto policies are 30/60/25 with a requirement to also take out PIP, UM and UIM coverage.
For passenger-carrying vehicles in the state, the requirements are:
Minimum liability limits on vehicles transporting household goods are based on GVW:
North Dakota law requires that all commercial auto policies have a minimum liability limit of 25/50/25. The state also requires business users to take out UM and UIM insurance.
Passenger transportation service providers in North Dakota need to meet the following insurance criteria:
Vehicles transporting property and nonhazardous goods in North Dakota have the following minimums:
For hazardous substance carriers in North Dakota, the required coverage is a policy with a $1 million or $5 million CSL, depending on the substance being transported.
The minimum liability limit for commercial auto policies in Ohio is set at 25/50/25.
Passenger-carrying transport operators’ minimum insurance liability requirements are:
For hazardous material transport, vehicles required a CSL minimum of $1 million or $5 million, depending on the substance in transit.
Oklahoma commercial auto policies must provide a minimum 25/50/25 liability.
For passenger-carrying transport, your insurance will need to satisfy the following conditions:
For property carriers, the minimums are:
For hazardous material transport in Oklahoma, you’ll need a policy with a $1 million to $5 million CSL, depending on the substance.
Oregon requires all commercial auto policies to have a minimum liability limit level of 25/50/20. You also need PIP, motorist bodily injury and UIM coverage.
Passenger-carrying vehicles and property-carrying vehicles both have a liability coverage requirement of $750,000 in hazardous material transport in Oklahoma, you’ll need a policy with a $1 million to $5 million CSL.
Pennsylvania requires all commercial auto policies to have minimum split liability limits of 15/30/5.
If you’re transporting passengers in the state, your vehicles must be insured to the following minimums:
Property carriers must have liability coverage of a minimum of $300,000 CSL.
In Rhode Island, the minimum liability coverage for commercial auto policies is a 25/50/25 split.
Passenger-carrying transport vehicles have the following minimum requirements:
Common and contract carriers in Rhode Island must have liability coverage of 250/500/25.
Public motor vehicles in Rhode Island require $1.5 million in bodily injury and $100,000 in property damage coverage.
South Carolina requires all commercial auto insurance policies to carry a 25/50/25 minimum liability limit split as well as UM coverage.
Passenger transportation providers must comply with the following insurance criteria:
For vehicles carrying property and nonhazardous goods, the minimums are:
For vehicles transporting hazardous material, you need:
The minimum liability limit for commercial auto policies in South Dakota is 25/50/25 with a requirement to take out coverage against uninsured UM and UIM.
If you’re operating passenger-carrying vehicles, your minimum levels are:
Property and nonhazardous transport vehicles have the following insurance requirements:
Hazardous substance carriers require a minimum coverage of $1 million or $5 million CSL, depending on the substance.
Tennessee’s minimum liability limit splits on commercial auto policies are 25/50/15.
Passenger transportation companies in Tennessee must meet the following minimums:
Property carrier vehicle operators’ minimum liability coverage per vehicle is $750,000 CSL. For vehicles under 10,000 pounds, the limit is $300,000.
A $1 million to $5 million CSL is required for hazardous materials carriers in Tennessee. The actual level depends on the materials being transported.
Texas requires all commercial auto policies to have a minimum liability limit of 30/60/25. There is also a mandatory requirement to take out PIP; however, you can avoid this by signing a waiver.
For passenger-carrying vehicles in the state, the minimums are:
Vehicles used for property and nonhazardous transport in Texas require insurance policies with liabilities of at least the following:
Hazardous materials carriers require minimum insurance coverage of $1 million or $5 million CSL, depending on the materials being transported.
Utah’s minimum liability limits are 25/65/15. Drivers are also required to take out PIP.
Passenger transport operator minimum requirements are:
The minimums for vehicles transporting property and nonhazardous goods in Utah are:
For hazardous substance carriers in Utah, the required coverage is $1 million or $5 million CSL, depending on the substance being transported.
In Vermont, the minimum liability coverage for commercial auto policies is set at a 25/50/10 split. This also must include coverage against uninsured UM and UIM.
Passenger-carrying transport operators in the state are required to take out policies with the following minimums:
For school buses, the requirement is:
When operating a vehicle you use for property or nonhazardous goods transport in Vermont, buy insurance that meets the following:
For vehicles carrying hazardous substance carriers, the required minimum level of coverage is $1 million or $5 million CSL, depending on the substance being transported.
Virginia’s split is 25/50/20 and policies must provide coverage for UM and UIM.
For passenger-carrying transport in Virginia, your insurance will need to satisfy the following conditions:
For vehicles you use to transport property or nonhazardous materials, the requirements are:
The minimum liability limit for commercial auto insurance in Washington is 25/50/10 with a requirement for policies to provide UM and PIP coverage.
Passenger-carrying vehicles in Washington must meet the following minimums:
The minimum liability coverage for vehicles transporting property and nonhazardous transport is:
For vehicles under 10,000 pounds, the minimum CSL insurance requirement is $300,000. For garbage and refuse collection vehicles, it’s $1 million or $5 million, depending on the substance being transported.
For passenger-carrying transport in Washington, D.C., the minimum insurance requirements are:
For property and nonhazardous transport, they are:
For hazardous material transport in Washington, D.C., you’re required to have minimum coverage of $1 million or $5 million on a CSL policy, depending on the substance.
West Virginia requires all commercial auto policies to have a minimum liability limit of 25/50/25. They also require UM insurance to provide protection against accidents caused by uninsured or hit-and-run drivers.
For passenger-transport vehicles in the state, vehicles must be insured to the following minimums:
Nonhazardous property carriers are required to have minimum liability coverage of 200/600/100.
Wisconsin’s minimum liability limit on commercial auto policies is 25/50/10.
For passenger-carrying vehicles, the minimal requirements are:
Vehicles used to transport property and nonhazardous in Wisconsin must have the following:
Vehicles transporting hazardous substances need a minimum coverage of $1 million or $5 million CSL, depending on the type of substance.
The minimum liability limit for commercial auto policies in Wyoming is 25/50/20.
Wyoming requires businesses to take out a policy that covers bodily injury and property damage up to the sum of $750,000 or more if federal law requires it.
Kimberlee Leonard contributed to this article.
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