Texas Commercial Auto Insurance Guide

Texas · Commercial Auto · Business Vehicles

Texas commercial auto insurance covers vehicles that are used mainly for business, such as company cars, cargo vans, box trucks, and many light and medium trucks, in the situations where a personal auto policy is the wrong tool for the job. A commercial auto policy is usually built from a few main pieces: liability coverage, which pays for injuries and damage you cause to other people; physical damage coverage, which is made up of comprehensive and collision and pays to fix your own vehicles; and HNOA coverage, which protects the business when people drive rented or personal cars for work. Certain motor carriers that haul across state lines also need a federal endorsement known as the Motor Carrier Act endorsement (form MCS-90). This educational guide explains each of those pieces in plain English for Texas business owners and fleet managers.

Shopping for a policy? This guide explains how Texas commercial auto coverage works. To compare quotes, see Texas requirements and start a quote, visit our Texas commercial auto insurance page.

Educational only, not legal or underwriting advice. Insurance forms, guidance from the Texas Department of Insurance, federal filing rules from the Federal Motor Carrier Safety Administration, and the insurance requirements written into leases and contracts all change over time. Before you rely on any coverage, confirm the details with a licensed agent: the declarations page, the schedule of covered vehicles, the list of drivers, and the exact wording of any federal endorsement or certificate of insurance. Spanish-language readers can also see seguro de auto comercial Texas.

1. When Texas businesses need commercial auto (not personal auto)

Personal auto policies often exclude, or sharply limit, coverage for vehicles that are used regularly for business purposes. That includes making deliveries, hauling tools and materials to job sites, carrying passengers for pay, and letting employees drive. When a vehicle is used in those ways, a personal policy may not pay a claim at all, which is why many Texas operations move to a commercial policy.

The most common signs that a business needs commercial auto coverage are a vehicle that is titled or leased in the name of the business, whether that business is a limited liability company, a corporation, or a sole proprietor operating under an assumed business name. Another strong sign is having employees or independent contractor helpers drive to job sites, make deliveries, or visit clients. Heavy use can also push a vehicle outside what personal insurers will accept, whether that means high mileage, heavy cargo, or specialized equipment mounted on the vehicle. Finally, many contracts and leases require a commercial certificate of insurance, which a personal policy cannot provide.

A plumber’s van, a florist’s delivery car, a contractor’s crew truck, and a small courier fleet all belong in this conversation, even if the owner still drives a personal car on the weekends. For a product overview, see our page on commercial auto insurance.

A quick self-check: commercial or personal?

In plain words, a personal auto policy is designed for commuting to work and running family errands, while a commercial auto policy is designed for vehicles that help a business earn money. Ask yourself whether the vehicle is registered or financed in the business’s name, whether anyone other than you or members of your household drives it for work, whether you carry tools, inventory, equipment, or customers’ goods in it most days, whether you charge customers to deliver goods or carry people, and whether a client, general contractor, or landlord has asked you for a commercial auto certificate or asked to be named as an additional insured on your policy.

If the answer to any of those questions is yes, talk with an agent about a commercial policy before you assume your personal policy will pay a claim. If you are not sure where your vehicles fall, our Texas commercial auto coverage requirements guide walks through the rules in more detail.

2. Texas minimum limits and required filings

There are three layers of rules to know about. Which of them apply to you depends on how heavy your vehicles are, what you haul, and whether your vehicles ever cross state lines.

Every vehicle on Texas roads: the state liability minimum

The Texas Department of Insurance explains that Texas law requires every driver to carry at least $30,000 of liability coverage per injured person, $60,000 per accident for injuries, and $25,000 for property damage. The Texas Department of Insurance itself warns that these minimums might be too low if you cause an accident involving several vehicles or if the other car is totaled. Any amount above your policy limit can come out of your own pocket, and the other driver can sue you for the difference.

Texas-only motor carriers: Texas Department of Motor Vehicles registration and Form E

The Texas Department of Motor Vehicles requires motor carrier registration, which gives the business a Texas Department of Motor Vehicles certificate number, for companies that operate only inside Texas and meet certain conditions. You generally need to register if you operate a commercial vehicle or combination of vehicles with a gross weight, registered weight, or gross weight rating over 26,000 pounds; if you haul hazardous materials in amounts that require warning placards on the vehicle; if you operate a vehicle designed to carry more than 15 passengers, counting the driver; or if you move household goods for pay, no matter how much the vehicle weighs.

For most of these carriers, meaning private or for-hire operations with vehicles over 26,000 pounds, the Texas Department of Motor Vehicles requires at least $500,000 of liability coverage, with higher amounts for certain hazardous materials and larger buses. Simply buying a policy is not enough. Your insurance company must electronically file Form E, which is the official proof of liability insurance, with the Texas Department of Motor Vehicles before your registration can be granted. Household goods movers also need Form H & I, which is proof of cargo insurance, and insurers use Form K to tell the state that a policy has been cancelled. The Texas Department of Motor Vehicles advises that if you switch insurance companies, the new Form E should be filed before the old one expires so that your registration never lapses. Texas also requires carriers that register with the Texas Department of Motor Vehicles to obtain a United States Department of Transportation number.

Crossing state lines: federal numbers and federal minimums

The Federal Motor Carrier Safety Administration requires a United States Department of Transportation number for vehicles used in commerce across state lines when the vehicle has a gross vehicle weight rating or gross combination weight rating of 10,001 pounds or more, or when it carries more passengers than the federal thresholds allow. Carriers that haul for hire across state lines also need federal operating authority, which comes with a motor carrier number.

Federal regulations in Title 49 of the Code of Federal Regulations, section 387.9, set minimum amounts of public liability coverage. For-hire carriers hauling general, non-hazardous freight in vehicles of 10,001 pounds or more must carry at least $750,000. Certain oil and hazardous materials loads require at least $1,000,000, and the highest-risk hazardous loads require at least $5,000,000.

3. Liability coverage on a Texas commercial auto policy

Liability coverage is the backbone of any commercial auto policy. It responds when an accident involving a covered vehicle injures someone or damages their property and your business is legally responsible, up to the limit and subject to the terms of the policy form. The Texas personal auto minimum described above is a poor benchmark for a business, because accidents involving work trucks and loaded vans can be far more severe than a typical fender bender.

Contractors, delivery companies, and anyone who hauls materials should choose their liability limit by thinking through the worst realistic injury and property damage their operation could cause, by checking the minimums demanded by leases, general contractors, and cities in their certificate requirements, and by deciding whether an umbrella or excess liability policy will sit on top of the auto liability to provide extra protection.

Liability coverage does not repair your own truck, and it does not replace cargo insurance or inland marine coverage for the goods you haul. Those are separate conversations. Customers and contractors frequently ask for proof of coverage, so see our guide to the certificate of insurance for businesses.

Split limits versus a combined single limit, in plain words

A split limit, such as the Texas minimum of $30,000 per injured person, $60,000 per accident for injuries, and $25,000 for property damage, caps what the policy will pay in separate buckets: one amount for each injured person, one total for all injuries in the accident, and one amount for property damage. A combined single limit, for example a policy that pays up to $1,000,000 per accident, is one pool of money that can go toward injuries, property damage, or both. Many contracts ask for a combined single limit because no single bucket can run out before the others.

4. Physical damage: comprehensive and collision

Physical damage coverages help repair or replace the business vehicles that are listed on your policy after a covered loss. There are two main parts.

Texas hail and wind seasons make comprehensive coverage especially important for businesses that park their vehicles outdoors. The way each vehicle is valued, the deductibles you choose, and any gap between what a vehicle is worth and what you still owe on a loan or lease should all be reviewed on your vehicle schedule rather than assumed to work the same way as a personal policy.

Terms that decide what a physical damage claim pays

The deductible is the part of each claim that you pay yourself. The Texas Department of Insurance gives this example: on a $1,500 collision claim with a $500 deductible, the insurance company pays $1,000.

Actual cash value means what the vehicle was worth right before the loss, after accounting for its age and wear. It is not what a brand-new replacement would cost.

A stated amount is a value you list for the vehicle on the policy. Depending on the form, the policy generally pays the lesser of that stated amount or the actual cost to repair or replace the vehicle. Stated amount coverage is common for custom-built or heavily outfitted work trucks.

You may also see comprehensive coverage called “other than collision” coverage. That is simply the industry’s name for the same thing.

5. Other coverages you will see on the quote, in plain words

Uninsured and underinsured motorist coverage pays for injuries to your drivers and, depending on the form, damage to your vehicle when the at-fault driver has no insurance or not enough insurance. Texas law requires insurance companies to include this coverage on auto liability policies unless a named insured rejects it in writing.

PIP pays medical bills and some lost wages for people riding in your vehicle, no matter who caused the accident. Like uninsured and underinsured motorist coverage, Texas requires it to be included unless it is rejected in writing.

Medical payments coverage, where it is offered on commercial forms, pays medical bills for people riding in a covered vehicle, regardless of who was at fault.

Towing and labor coverage pays to tow a vehicle that has broken down or been damaged, and rental reimbursement coverage pays for a replacement vehicle while yours is being repaired after a covered loss.

Hired physical damage coverage pays for damage to a vehicle your business rents. It is separate from hired and non-owned auto coverage, described below, which covers only liability to other people.

6. Hired and non-owned auto coverage

The hired auto part of this coverage typically protects the business against liability when it rents or borrows a vehicle for business use. The non-owned auto part typically protects the business against liability when an employee drives his or her own personal vehicle on company business. Together, hired and non-owned auto coverage is often the quiet gap-filler for offices that do not own any vehicles but still send people out on the road.

This coverage usually does not pay for damage to the employee’s own car, which stays with the employee’s personal policy, and it does not automatically cover every gig-economy or app-based driving arrangement. Check who counts as an insured under the policy, how rentals are handled, and whether your general liability policy or business owner’s policy already includes a limited version of this coverage.

Why it matters even if your business owns no vehicles

Imagine an employee causes a wreck while running a work errand in her own car. The injured person may sue your business as well as the driver. The employee’s personal policy usually pays first, but if its limits run out, the remaining claim can reach the business. Hired and non-owned auto coverage is designed to fill exactly that gap. For full details, see our guide to hired and non-owned auto insurance for businesses.

7. The federal Motor Carrier Act endorsement (form MCS-90) for Texas motor carriers

For-hire motor carriers that cross state lines and are subject to the Federal Motor Carrier Safety Administration’s financial responsibility rules often must keep the Motor Carrier Act endorsement, known by its form number MCS-90, or an equivalent form of proof, attached to their liability policy. In plain language, this endorsement is a promise made to protect the public, and it is tied to federal filing requirements. It is not a free upgrade to unlimited coverage, and it does not replace the need to choose adequate liability limits, control who drives, and buy proper cargo coverage.

Keep three points in mind. First, Texas haulers who stay entirely inside the state may face different filing and insurance rules than carriers who cross state lines. Second, contracts with freight brokers and shippers often demand higher limits than the federal minimum. Third, the endorsement does not replace physical damage coverage, cargo coverage, or trailer interchange coverage for trailers you pull under agreements with other companies.

What the endorsement actually does

Under Title 49 of the Code of Federal Regulations, section 387.15, the endorsement promises that the insurance company will pay a final court judgment for injuries or damage to members of the public, up to the federal minimum, even if the policy would not otherwise cover that accident. A common example is a truck that was never listed on the policy. If the insurance company pays a claim that the policy itself would not have covered, the endorsement allows the insurer to seek repayment from the motor carrier. In other words, it protects the public, not your business.

If you move freight across state lines or hold a United States Department of Transportation number or federal operating authority, ask your agent specifically about filings and endorsements, and do not rely on a personal policy or a light commercial policy alone. For more about trucking, see our page on Texas commercial truck insurance.

8. Other pieces that often sit next to commercial auto

9. What affects the price of commercial auto in Texas

There is no single average premium that fits every business, because insurance companies look at many details. The type and weight of each vehicle matters, since a sedan, a cargo van, a box truck, and a tractor-trailer carry very different risks. What your business does and what it hauls matters too: a landscaper, a courier, and a hazardous materials hauler are all priced differently.

Insurers also look at how far your vehicles travel and where they are parked overnight, at the ages, experience, and motor vehicle records of your drivers, and at your past claims, usually over the last several years. The limits and deductibles you choose make a difference as well: higher liability limits cost more, and higher deductibles usually cost less. Finally, operations that need state or federal filings, such as Form E or the federal Motor Carrier Act endorsement, or that need specific additional insured wording, may find that fewer insurance companies are willing to write their coverage.

10. Ways to lower commercial auto costs

Start with your drivers. Check each driver’s motor vehicle record before hiring and on a regular schedule afterward, and keep a written policy that explains who may drive company vehicles and how. Next, keep your vehicle list accurate by promptly removing any vehicles you have sold or retired, and make sure the distance and type of use listed for each vehicle match what it really does.

Choose deductibles that you could actually afford to pay on a bad day, rather than the lowest possible deductible by default. If your insurance company gives credit for vehicle tracking devices or dash cameras, consider them, and keep records of driver training. Report claims quickly and document them well, because a history of clean, well-handled losses helps at renewal time. Finally, have an independent agency shop your coverage with several insurance companies instead of renewing automatically every year.

11. Shopping commercial auto in Texas

Quotes change based on your vehicle list, how far the vehicles travel, what kind of cargo they carry, your drivers’ motor vehicle records, your claim history, and the limits you want. There is no single average number that applies to everyone. To get an accurate quote, follow these practical steps.

1. Make a complete list of every vehicle and trailer, along with who drives each one.
2. Gather your drivers’ motor vehicle records and any training or safety documents you have.
3. Write down the minimum limits and additional insured requirements in your contracts before you start shopping, so every quote meets them.
4. Decide deliberately on your liability limits and your physical damage deductibles rather than accepting defaults.
5. Ask whether hired and non-owned auto coverage, hired physical damage coverage, or federal endorsement filings apply to your business.

An independent agency compares insurance companies that fit your type of business. You can start with a business quote or ask an agent. If you already have your vehicle and driver list ready, use our commercial auto quote form.

12. Common claim scenarios (illustrative examples)

These simplified examples show which coverage usually responds in common situations. Every real claim depends on the actual policy wording and the facts of the loss.

A crew truck rear-ends a car at a stoplight. Liability coverage pays for the other driver’s injuries and car repairs, and collision coverage pays to fix your truck, minus your deductible.

Hail dents a parking lot full of company vans. Comprehensive coverage pays for the repairs, minus the deductible that applies to each van.

An employee driving her own car hits a pedestrian while dropping off paperwork. Her personal auto policy pays first. If the business is sued and her limits run out, the non-owned auto part of hired and non-owned auto coverage can protect the business.

A rented box truck clips a building’s awning. The hired auto part of hired and non-owned auto coverage handles the liability for the awning, but damage to the rented truck itself requires hired physical damage coverage.

An uninsured driver runs a red light and injures your driver. Depending on what you carry, uninsured and underinsured motorist coverage, personal injury protection, or workers’ compensation may pay for your driver’s injuries.

Tools are stolen out of a locked van. Commercial auto insurance usually covers the van but not the tools inside it. Stolen tools are typically an inland marine or tool floater claim.

Frequently asked questions