Why Is Commercial Auto Insurance So Expensive? (& What You Can Do)

Why Is Commercial Auto Insurance So Expensive? (& What You Can Do)

If you’ve have commercial auto insurance in place for your business, you’ve probably noticed that premiums are higher than ever. Many business owners and CFO's are asking the same question: why is commercial auto insurance so expensive, and what can you do about it? Let’s break down the reasons behind rising costs and strategies to help you manage them.

Why Commercial Auto Insurance Rates Are Rising

1. More Claims and Higher Repair Costs

Insurance companies are paying out more because repairs are more expensive and take longer to complete. Supply chain shortages, rising labor costs, and more complex vehicle technology all contribute to this trend. Commercial vehicles, with their larger size and specialized equipment, often face even steeper repair bills.

2. Increase in Accidents and Distracted Driving

Accidents have become more frequent, with distracted driving still a leading cause. More accidents mean more claims, which drives up rates across the board.

3. Inflation Across the Board

From parts and labor to medical bills and legal fees, inflation has pushed up every cost that insurance companies must cover when a claim happens.

4. A More Litigious Environment (“Social Inflation”/Legal System Abuse)

We live in a world where lawsuits are more common, settlements are higher, and jury awards are larger. This “social inflation”, now being called "legal system abuse", directly impacts insurance companies’ payouts—and your premiums.

What You Can Do to Manage Costs

While you can’t change the overall market, there are steps you can take to help lower your premiums and keep them under control:

• Maintain Your Vehicles – Regular inspections and preventive maintenance help reduce accidents caused by mechanical failures.
• Screen and Train Your Drivers – Running MVR reports and hiring responsible drivers is one of the most effective ways to lower risk.
• Leverage Telematics and Fleet Management Tools – These systems track driver behavior and promote safer driving, which can lead to discounts and fewer claims.
• Bundle Your Policies – Many carriers offer discounts if you combine your commercial auto with other policies such as general liability or workers’ compensation.
• Focus on Preventing Claims – A clean claims history is one of the biggest factors in controlling your long-term insurance costs. The fewer claims you have, the more negotiating power you gain with insurance companies.
• Implement a Telematics Program and Distracted Driving Policy – Combining technology that tracks driver behavior with a clear company policy against distracted driving can significantly reduce accident risks and demonstrate to insurers that your business is serious about safety.

Final Thoughts

Rising commercial auto insurance premiums can be frustrating, but the right strategy can make a big difference. Work with an experienced independent agent who understands the Michigan market and can help you compare options, negotiate with carriers, and put risk management practices in place to keep your costs under control.

Commercial auto insurance may be expensive, but with the right approach, you can protect your business and avoid unnecessary financial strain.