You've built your handyman business from the ground up—taking jobs in your personal truck, hauling tools in your backseat, making it work. But now you're ready to take things to the next level by getting your first official business vehicle. Before you sign those papers or slap your company name on the side, there's one critical step you can't afford to skip: getting commercial auto insurance.
Here's the thing most new business owners don't realize until it's too late: your personal auto insurance policy probably won't cover you when you're driving for work. And when we say "won't cover you," we mean your insurer can deny your claim entirely—even if the accident wasn't your fault. Let's break down everything you need to know about insuring your first business vehicle.
Why Your Personal Auto Policy Won't Cut It
Most personal auto insurance policies are built for everyday use—commuting to a regular job, running errands, picking up the kids from school. They're not designed to cover the risks that come with business use, like transporting tools, materials, and equipment to multiple job sites every day.
Think about your typical day: you load up your truck with ladders, power tools, paint supplies, and plumbing equipment. You drive to three different job sites. You transport materials from the hardware store to a customer's home. Every single one of those trips falls under business use—and your personal policy isn't covering any of it.
What Commercial Auto Insurance Actually Covers
Commercial auto insurance is specifically designed for vehicles used in business operations. When you're driving your work truck to job sites, you need coverage that understands and protects against the unique risks you face.
Liability coverage is the foundation. This includes injuries caused to third parties by your vehicles—medical bills, lost wages, pain and suffering damages, as well as legal defense costs and settlement amounts if parties sue your business, up to your policy limits. Most states require minimum liability coverage, but those minimums often range from just $25,000 to $100,000—nowhere near enough to protect you from a serious accident.
Insurance experts recommend a Combined Single Limit (CSL) of $1 million for handyman contractors. This might sound like overkill, but consider this: if you cause a multi-vehicle accident or seriously injure someone, medical bills alone can exceed $500,000. Limits below $500,000 can leave you personally exposed, putting your business assets and personal savings at risk. The good news? Moving from $500,000 to $1 million in coverage typically doesn't cost that much more—usually just a few hundred dollars annually.
Understanding State Requirements and Costs
Every state has different minimum requirements for commercial auto insurance. For example, Alaska requires $50,000 per person, $100,000 per accident, and $25,000 for property damage. Arizona's minimums are lower at $25,000/$50,000/$15,000. Delaware requires $25,000/$50,000/$10,000. Most states require business owners to secure their business-owned vehicles under a commercial auto insurance policy—it's not optional.
As for costs, handyman businesses pay an average of $185 per month, or about $2,224 per year, for commercial auto insurance. With the recommended $1 million liability limits, you can expect to pay approximately $1,500-$3,500 per vehicle annually. That breaks down to $150-$200 per month on average. Yes, it's more expensive than personal auto insurance—but it's also covering significantly more risk and protecting your entire business from catastrophic financial loss.
Your actual premium depends on several factors: your driving record, the type of vehicle, how you use it, how many miles you drive annually, where your business operates, and your claims history. A newer truck with advanced safety features will typically cost less to insure than an older work van. Operating in a rural area generally costs less than working in a dense urban environment with higher accident rates.
Don't Forget Hired and Non-Owned Auto Coverage
Here's a scenario that catches many business owners off guard: you hire a helper who uses their own truck to meet you at job sites. Or you rent a larger truck for a big project. Or you send an employee to pick up supplies in their personal vehicle. If any of these situations result in an accident, who's responsible?
That's where hired and non-owned auto insurance (HNOA) comes in. This coverage protects your business when you or employees drive rented, leased, or borrowed vehicles, as well as when employees use their personal vehicles for business purposes. It covers property damage or bodily injury to someone else if your business caused an auto accident in one of these situations. It also covers legal defense costs and settlements if your business gets sued.
What HNOA doesn't cover is important to understand: it won't cover injuries to you or your staff, damage to your own business property, or damage to the rented or employee's personal vehicle itself. It's liability-only coverage, protecting you from claims made by third parties. Most small business owners add hired and non-owned auto coverage to their general liability insurance or commercial auto policy as an endorsement, which helps save money compared to buying it separately.
How to Get Started with the Right Coverage
Getting commercial auto insurance doesn't have to be complicated. Start by assessing your actual needs: how many vehicles does your business own or plan to own? Do you have employees who drive for work? Will you ever rent vehicles or have workers use their personal cars for business errands?
Get quotes from multiple insurers who specialize in contractor coverage. Companies like The Hartford, Progressive Commercial, NEXT Insurance, and Insureon all offer commercial auto policies tailored to handyman businesses. When comparing quotes, don't just look at the premium—compare the liability limits, deductibles, and what's actually covered.
Consider bundling your commercial auto with other business insurance you need. Most handyman businesses also need general liability coverage and potentially workers' compensation if they have employees. Many insurers offer discounts when you bundle multiple policies, and it simplifies your insurance management to have everything with one carrier.
Make the switch before you need it. Don't wait until after you've been driving your new business vehicle for weeks or months. Get your commercial auto policy in place the day you take possession of that vehicle. One accident without proper coverage could bankrupt your business before it really gets going. The peace of mind knowing you're properly protected is worth far more than the monthly premium.
