If you own or operate a business in Michigan and have vehicles on the road, understanding how much liability coverage you need on your commercial auto insurance policy is critical.
Whether you’re a contractor, delivery service, trucking company, or a business with just one or two vehicles, the right liability limits can protect your business from lawsuits, contract issues, and catastrophic financial loss.
This guide breaks down what commercial auto liability insurance covers, Michigan requirements, and why many businesses start with
$1 million in Combined Single Limit (CSL) coverage.
What Is Commercial Auto Liability Insurance?
Commercial auto liability insurance protects your business when a company-owned or business-used vehicle causes injury or property damage to others.
This coverage typically pays for:
- Bodily injury to other drivers, passengers, or pedestrians
- Property damage to other vehicles or structures
- Legal defense costs, even if a claim is groundless
In Michigan, commercial auto liability is
legally required for any vehicle used for business purposes.
Michigan Commercial Auto Liability Requirements
Michigan operates under a
no-fault insurance system, but that does not eliminate liability exposure for businesses.
Commercial auto liability is still required to cover:
- Bodily injury liability
- Property damage liability
While minimum limits exist,
minimum coverage is rarely enough for most businesses once lawsuits, medical costs, and legal expenses are considered.
Why $1 Million CSL Is a Strong Starting Point
I almost always recommend starting with
$1 million in Combined Single Limit (CSL) liability coverage for commercial auto policies in Michigan.
What Is Combined Single Limit (CSL)?
CSL means there is
one total limit that can be applied across bodily injury and property damage, rather than separate caps for each.
For example, a $1 million CSL can be used flexibly for:
- Medical bills
- Vehicle damage
- Legal costs
This structure offers more protection and fewer coverage gaps.
Why $1 Million Makes Sense
- Medical costs add up fast
- Commercial accidents tend to involve higher claim severity
- Many contracts require at least $1 million in liability
- Legal defense costs alone can be substantial
For most businesses, $1 million is a practical baseline — not an overreaction.
When an Umbrella Policy Makes Sense
If your business has higher risk exposure, a
commercial umbrella policy can provide additional protection beyond your auto liability limits.
Umbrella coverage may make sense if you:
- Operate multiple vehicles
- Have drivers on the road daily
- Haul materials, equipment, or hazardous goods
- Work under contracts requiring higher limits
- Want added protection for peace of mind
How Umbrella Insurance Works with Commercial Auto
An umbrella policy
kicks in after your base policy limits are exhausted.
For example:
- $1M commercial auto liability
- $2M umbrella policy
- Total available coverage: $3M
Umbrella insurance can also extend over other policies, such as general liability, providing broader protection across your business.
Why Umbrella Coverage Is Often More Affordable Than Expected
Many business owners assume umbrella coverage is expensive — but it’s often one of the
most cost-effective ways to increase protection.
Compared to raising base policy limits, umbrellas:
- Offer higher limits for lower cost
- Reduce exposure to catastrophic losses
- Satisfy contractual insurance requirements
For many businesses, umbrella coverage delivers significant value relative to the premium.
Additional Coverages to Consider on a Michigan Commercial Auto Policy
Liability is only part of the picture. Depending on your business, these coverages are also worth reviewing:
Uninsured / Underinsured Motorist Coverage (UM/UIM)
Protects your business if one of your drivers is hit by a driver with little or no insurance.
Unlimited Personal Injury Protection (PIP)
In Michigan, Unlimited PIP can cover medical expenses for your drivers and passengers regardless of fault — and is often a smart choice even on commercial policies.
Physical Damage Coverage
Includes:
Protects your business vehicles from accidents, theft, vandalism, and weather-related losses.
Motor Truck Cargo Coverage
Critical for businesses hauling goods or materials for others, especially trucking and delivery operations.
How Much Liability Coverage Is Right for Your Business?
There is no one-size-fits-all answer, but for most Michigan businesses:
- $1M CSL is a strong starting point
- An
umbrella policy provides cost-effective extra protection
- Additional coverages should align with how your vehicles are used
The right structure depends on your industry, contracts, vehicle usage, and risk tolerance.
Need Help Reviewing Your Commercial Auto Coverage?
If you’re unsure whether your current commercial auto liability limits are enough — or if you’re setting up coverage for the first time — getting a professional review can help you avoid costly gaps.
If you’d like help reviewing your commercial auto insurance in Michigan or exploring higher liability limits and umbrella options, feel free to reach out.
