Do you need commercial insurance for your truck?

Emmet Pierce

Although pickup trucks often are used for work purposes, drivers who use them for personal transportation typically pay little or no more for auto insurance than if they drove a passenger car.

"Typically, whether you are insuring a pickup truck or a car, if the usage is identical, there is not a whole lot of variation on what it’s going to cost you," says Dennis Hilton, an independent insurance agent in Maine.

Pickups once were more costly to insure than passenger cars because they were considered to be more likely to be involved in crashes that killed or seriously injured the occupants of other vehicles. That's no longer the case, says Pete Moraga, a spokesman for the Insurance Information Network of California.  

Because of airbags and more durable auto construction, passenger cars can better withstand crashes with pickup trucks, Moraga says. He noted that pickup manufacturers also are doing a better job of aligning bumpers with those of passenger cars. This results in less damage when collisions occur.

How to buy truck insurance

If you use a pickup for work purposes, your insurer will ask you to take out commercial auto insurance, because of the higher risks involved, says James Whittle, assistant general counsel and chief claims counsel for the American Insurance Association. 

A pickup that is used for work is more likely to be damaged in an accident, and insurance companies will charge you extra for the added risk, Whittle explains. "If you park it at a job site where there are large vehicles and heavy machinery, insurers want to know that."

As with standard auto insurance, commercial insurance may include liability, collision, comprehensive, medical payments and uninsured motorist coverage. An uninsured motorist policy provides you with coverage if you are involved in an accident with another driver who is legally responsible for the collision, but lacks auto insurance.

 Each state has minimum auto liability coverage requirements that apply, whether you have standard or commercial insurance. Be sure to check with your state department of motor vehicles for local regulations.

In California, for example, the minimum liability coverage required for cars, sports utility vehicles and pickups is $15,000 per person for injuries or death, with a limit of no less than $30,000 per accident. Drivers also must have a minimum $5,000 in insurance for the damage they cause to property.

How much does truck insurance cost?

Ken Foley, an insurance agent in New Jersey who handles commercial lines, says drivers typically pay between $500 and $1,000 more per year for auto insurance when they have commercial coverage for their pickups instead of standard coverage. Each case is different, however.

Foley says that while commercial insurance is more expensive than personal coverage, there is no way to determine a typical price for a personal policy for the driver of a pickup. That's because there are many factors that underwriters must take into consideration when setting rates. Whittle agrees. "(Your rate) will depend on your location. It will depend on whether the car is used full time or part time in your business. There can be a lot of variables."

Other factors may include the number of miles you drive each year, your personal driving record, your age, and your credit history.

Pickup truck owners may be charged more for insurance because insurers believe that they are more likely to be burglarized by thieves looking for tools and construction equipment, Whittle says.

Unlike standard passenger vehicles, pickups "may have generators, electronic devices, and expensive equipment locked into the vehicles that they take to job sites," he adds.

Foley recommends to his customers with commercial auto insurance that they buy umbrella liability policies. Umbrella policies kick in once the limits of the auto policy are exhausted.

For example, if you were successfully sued for $800,000 following an accident and your auto policy paid a maximum of $500,000 for liability claims, you are liable for the remaining $300,000. An umbrella liability policy can protect you by covering the amount of the claim that exceeds your auto policy limits.

How much liability insurance you'll need will depend on your assets. The more your assets are worth, the more you have to lose.

The growth in pickup popularity

The demand for pickup truck insurance is expected to grow. According to automotive researcher R.L. Polk, the sales of pickups had been in decline for five years, but that changed with the introduction of new models in 2013 by Ford, GM, and Toyota. The sale of pickups is expected to increase sharply in the U.S. during 2013 and 2014.  

Polk says pickup sales are increasing because auto manufacturers are advertising them more.  A second factor in rising pickup sales is the rebound of the home building industry. Renewed construction activity is expected to result in more purchases of pickups by people who have jobs related to home construction.

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