What does commercial auto insurance cover—and what requires separate coverage?

By Mark Melliand, owner, Melliand Insurance Agency · 13 years as an independent agent · Published October 25, 2026

The short answer: A commercial auto policy isn’t a single coverage. It’s built from separate parts, and each part may be selected, rejected or added by endorsement:

  • liability
  • damage to your own vehicles
  • uninsured/underinsured motorist
  • personal injury protection
  • medical payments
  • optional extras

What your policy actually covers depends on:

  • its declarations
  • which vehicles are covered for each coverage
  • who qualifies as an insured
  • its endorsements, exclusions, limits and deductibles

Some business exposures, such as loose tools, customers’ property and employee injuries, may need an endorsement, separate coverage or another policy.

If you’re still deciding whether your vehicles need a commercial policy at all, start with our guide to personal versus commercial auto insurance in Texas.

Coverage at a glance

Coverage or exposureWhat it generally addressesWhat to confirm
Auto liabilityClaims that an insured caused bodily injury or property damage to others with a covered vehicleLimits; which vehicles are covered; who is an insured; contract requirements
CollisionDamage to a covered vehicle from a collision or overturnWhich vehicles have it; deductible; how a loss is valued
Comprehensive (other than collision)Theft, fire, vandalism, weather and other non-collision damage to a covered vehicleWhich vehicles have it; deductible; how a loss is valued
Uninsured/underinsured motorist (UM/UIM)Damages an insured is legally entitled to recover from a driver with no or too little insuranceWhether it was selected or rejected in writing; who qualifies under the policy
Personal injury protection (PIP)Certain medical, income and related expenses after an auto accident, regardless of faultWhether it was selected or rejected in writing; who qualifies under the policy
Medical paymentsMedical expenses after an auto accident, under its own termsWhether it’s available and selected; who qualifies; exclusions
Hired and non-owned auto (HNOA) liabilityLiability when your business uses vehicles it doesn’t ownDamage to those vehicles is a separate question
Attached equipment, tools, cargo and trailersVaries by policy definitions, disclosure and endorsementsMay need an endorsement, separate coverage or another policy
Rental, towing, roadside and gapOptional coverages whose availability and terms varyWhether any is available and selected
Employee injuriesGenerally a workers’ compensation question, not auto liabilityYour workers’ compensation decision and other coverages

Auto liability

Liability coverage responds to claims that an insured caused bodily injury or property damage to others with a covered vehicle. It doesn’t pay to repair your own vehicle. Three parts of the policy decide whether it applies:

  • Which vehicles are covered. Business auto policies use the declarations to show which vehicles are covered for each coverage. Common categories include any auto, owned autos only, specifically described autos, hired autos and non-owned autos (sample business auto form, illustrative).
  • Who is an insured. The policy defines who is an insured, and that definition has exceptions. In the sample form, for example, an employee isn’t an insured while driving a vehicle the employee or a household member owns (sample form). Listing a driver on an application doesn’t by itself decide insured status. The policy wording and any driver endorsements do.
  • Defense. Business auto forms commonly include a duty to defend covered lawsuits, subject to their terms (sample form). Ask how your policy handles defense and when that duty ends.

Texas sets minimum liability limits of $30,000 per person and $60,000 per accident for bodily injury, and $25,000 for property damage (Texas Transportation Code § 601.072). Contracts, leases and some motor-carrier operations may require more.

Physical damage: collision and comprehensive

Physical damage coverage applies to your own covered vehicles:

  • Collision generally covers damage from a collision with another object or an overturn.
  • Comprehensive generally covers other causes, such as theft, fire, vandalism or weather (sample form).

Points to confirm:

  • Liability-only coverage. If this policy provides only liability coverage for a vehicle, it does not provide collision or comprehensive coverage for that vehicle. Other coverage arrangements must be considered separately.
  • Coverage is chosen vehicle by vehicle. Collision and comprehensive may apply to some vehicles on a policy and not others. Check the declarations.
  • Deductibles. Physical damage coverage may have a deductible. Confirm the amount and whether any waiver or exception applies.

How a loss is valued

The amount paid after a loss depends on the policy’s valuation provisions. In the sample business auto form, the most the insurer pays is the lesser of the vehicle’s actual cash value or the cost to repair or replace it with property of like kind and quality (sample form).

Some policies ask you to state a value for each vehicle. A stated amount doesn’t necessarily guarantee that payment after a total loss.

  • Under the sample stated-amount endorsement, the most the insurer pays is the least of actual cash value, repair or replacement cost, or the stated amount (sample endorsement, illustrative).
  • One insurer explains that it compares the stated amount with actual cash value and pays the lesser (Progressive Commercial, general guidance).

Ask your agent to confirm the valuation provisions in your own policy. Don’t assume a total-loss payment will match the stated value or pay off a loan.

Uninsured/underinsured motorist (UM/UIM)

UM/UIM protects insureds who are legally entitled to recover damages from a driver who has no liability insurance or not enough. It’s a separate coverage question from liability and from collision.

What the law requires of insurers. An insurer may not issue an automobile liability policy in Texas unless UM/UIM coverage is provided in or supplemental to the policy (Texas Insurance Code § 1952.101(b)). That requirement doesn’t apply if a named insured rejects the coverage in writing. A rejection can also carry over to a renewal or reinstated policy unless the named insured asks for the coverage in writing (§ 1952.101(c)).

The Texas Department of Insurance has told insurers that these requirements apply to commercial as well as personal auto policies. TDI also says UM/UIM bodily injury and UM/UIM property damage are separate coverages that can be selected or rejected separately (TDI Bulletin B-0032-11).

Whether a particular person, vehicle or accident is covered is a different question. It depends on the policy’s definitions of who is an insured, which vehicles are covered, its exclusions and its limits. Don’t assume personal-auto UM/UIM guidance applies unchanged to a business auto policy. If your coverage is limited, for example to hired and non-owned auto liability, ask your agent how UM/UIM is handled for that arrangement.

Personal injury protection (PIP)

What it’s for. PIP is designed to pay certain reasonable expenses arising from an auto accident, such as medical expenses and lost income (Texas Insurance Code § 1952.151). Benefits are payable regardless of who was at fault (§ 1952.155(a)).

What the law requires of insurers. An insurer may not issue an automobile liability policy in Texas unless PIP coverage is provided in or supplemental to the policy (§ 1952.152(a)). That requirement doesn’t apply if a named insured rejects the coverage in writing. A rejection can also carry over to a renewal or reinstated policy unless the named insured asks for the coverage in writing (§ 1952.152(b)).

Whether a particular person or accident is covered depends on the statute’s and the policy’s definitions, the policy’s limits and any exclusions. When the named insured is a business rather than a person, or the coverage is limited, for example to hired and non-owned auto liability, ask your agent who qualifies for PIP and in which vehicles.

Medical payments

Medical payments is a separate coverage from PIP. It generally pays medical expenses after an auto accident, under its own limits and terms. Who qualifies, what’s excluded, whether it’s available, and how it fits with PIP and workers’ compensation all vary by insurer and policy. Texas law leaves the offering of medical payments coverage to the insurance commissioner’s requirements, separate from the PIP rules (Texas Insurance Code § 1952.161). Ask your agent whether it’s available and what its terms are.

Hired and non-owned auto (HNOA)

HNOA liability addresses your business’s liability when it uses vehicles it doesn’t own, such as rentals or employees’ own cars used for business errands. Liability protection doesn’t automatically include:

  • damage to the rented or employee-owned vehicle
  • UM/UIM or PIP for that arrangement

Who is insured, and how your policy works together with an employee’s or rental company’s coverage, depends on the actual wording. Our guide to business auto liability when employees use their own cars explains this in detail.

Exposures that need additional review

These may require an endorsement, separate coverage or another policy. Not every option is available from every insurer, and some depend on the type of vehicle or operation.

Permanently attached equipment and modifications. Lifts, racks, shelving, built-in toolboxes, wraps and other additions may or may not be treated as part of the vehicle. Coverage depends on the policy’s definitions, exclusions, disclosure and valuation, and any endorsements. Tell your agent about additions so they can be described and valued, and confirm whether any equipment exclusions apply.

Loose tools and movable equipment. Tools and equipment you carry in a vehicle aren’t the same as the vehicle or its attached equipment. They’re often addressed under inland marine or other property coverage (Progressive Commercial, general guidance). Confirm how your tools would be covered while in a vehicle, at a job site and in storage.

Your own goods vs. customers’ property.

  • Business auto liability commonly excludes damage to property the insured owns, transports or has in its care (sample form).
  • Your own goods and materials are a property coverage question.
  • Customers’ goods you haul may raise a cargo or other coverage question.

Trailers and towed equipment.

  • Liability and physical damage are separate questions for each trailer. Confirm which of your trailers are covered for liability and which for physical damage.
  • Trailers you don’t own add more. Trailer interchange coverage is physical damage coverage for trailers you don’t own while they’re in your possession under a written trailer or equipment interchange agreement in which you assume liability for loss to the trailer (sample motor carrier form, illustrative). It doesn’t apply to every borrowed or rented trailer.
  • A trailer borrowed from another business or rented for a job without such an agreement raises different questions. Ask your agent how it would be handled.

Rental reimbursement, towing and roadside assistance. These are optional or limited in many policies, and terms vary by insurer, vehicle type and operation. Confirm whether any is available, which vehicles it applies to, and what limits apply.

Loan or lease balance. A total-loss payment is based on the policy’s valuation provisions, and it may be less than what you owe. Gap or loan/lease payoff protection may be available from some insurers, lenders or dealers. Ask your agent and your lender what applies to your vehicle.

Employee injuries.

  • Business auto liability generally excludes injury to your own employees arising out of their employment, treating it as a workers’ compensation and employer’s liability matter (sample form).
  • In Texas, many private employers choose whether to carry workers’ compensation. Those that don’t are called non-subscribers (TDI Division of Workers’ Compensation).
  • Review how employee injuries in vehicles would be handled under your coverages as a whole.

Umbrella or excess liability. An umbrella generally applies above underlying policies that are listed on it (IA Magazine). Ask how any umbrella or excess policy applies to your auto exposures, and don’t assume it fills every gap.

Important qualifications

  • Personal use and household drivers. A commercial auto policy can cover business and permitted personal use, depending on its terms, drivers and endorsements. It doesn’t automatically cover every driver or household member (personal vs. commercial guide).
  • Not every vehicle is covered. Don’t assume every vehicle your business or employees own, rent, borrow or use is covered.
  • Specialized operations need disclosure. Deliveries, ride-hailing, transporting passengers and other specialized operations need specific disclosure and review.
  • Certificates. A certificate of insurance can’t alter, amend or extend coverage (TDI certificates FAQ). It can’t satisfy a contract requirement the policy doesn’t meet.

Three hypothetical examples

These examples are illustrations, not real clients. They show questions to ask, not how a claim would be decided.

A plumber’s van is broken into overnight. Questions to review:

  • Does the van have comprehensive coverage, and what’s the deductible?
  • Is the built-in shelving treated as part of the vehicle under the policy, and was it described when the coverage was set up?
  • Do the stolen loose tools fall under any inland marine or property coverage?

A bakery employee is hurt in a crash while driving the delivery van. Questions to review:

  • Does the bakery carry workers’ compensation? If not, how would the employee’s injury be handled under its other coverages?
  • How do the auto policy’s terms, including any PIP or medical payments and their exclusions, apply to an employee injured while working?
  • Do the damaged baked goods fall under any property coverage?

A contractor rents a box truck and borrows a trailer for a week-long job. Questions to review:

  • Does hired auto liability apply to the rented truck?
  • Is damage to the rented truck covered under the contractor’s policy, the rental agreement or neither?
  • Is there a written interchange agreement, and what coverage applies to this borrowed trailer? Do not assume trailer interchange covers every borrowed or rented trailer.

Questions to ask before you buy

  1. Which vehicles are covered for each coverage?
  2. Who is an insured, and how are personal use and household drivers handled?
  3. Do my liability limits meet my contracts, leases and any filing requirements?
  4. Which vehicles have collision and comprehensive, and with what deductibles?
  5. What are the valuation provisions, and could I owe more on a loan or lease than a total-loss payment?
  6. Have I selected or rejected UM/UIM and PIP, and who qualifies for them under this policy?
  7. Is medical payments coverage available, and on what terms?
  8. How are rented vehicles and employees’ own cars handled?
  9. How are attached equipment, loose tools, cargo and trailers handled?
  10. How do workers’ compensation and any umbrella or excess policy fit with the auto policy?

When you’re ready for a quote, see what information you need for a commercial auto quote in Texas.

Ready to review your coverage?

Mark Melliand writes commercial auto insurance through Progressive. Availability of any coverage depends on the insurer’s underwriting.

Request a business insurance quote →, call (972) 346-4666, or email melliandinsurance@gmail.com. Hours are Monday–Friday, 8 AM–5 PM Central. In-person visits are available by appointment at your business throughout the Dallas–Fort Worth area.

References

Texas law and regulators

Sample policy forms (illustrative only)

These standard industry forms explain common concepts. They’re older editions on file outside Texas and don’t establish the terms of any current Texas policy.

Insurer guidance (general descriptions, not policy terms)

Industry publication

This guide is general information, not a statement of coverage, eligibility or price. Your policy’s declarations, forms and endorsements control, and availability of any coverage depends on the insurer.