For businesses that need commercial auto insurance, the past several years have not been kind to the bottom line. Carriers have struggled to turn a profit as they face ongoing financial pressure from increasing loss severity and litigation expenses. As a result, commercial auto insurance premiums have risen relentlessly, even as costs for other business insurance policies have leveled off.
According to the Federal Reserve Bank of St. Louis’s Producer Price Index, commercial auto insurance premiums rose by more than 19% from June 2015 to June 2025. Year over year, premiums grew by 6.7%.
And there’s no relief in sight – at least not in the short term.
“Commercial auto premiums will likely continue to increase into 2026,” says Loretta Worters, vice president of media relations for the Insurance Information Institute (Triple-I). “Unless there’s a significant shift in claim trends or a major drop in loss frequency and severity, rate hikes will likely remain necessary for insurers to regain profitability.”
Other industry experts agree.
“No one’s figured out how to get it quite right, and the only answer anyone has is that the prices are just too low,” says Richard Kerr, CEO of Novatae Risk Group, a wholesale commercial insurance brokerage based in Dallas. “We’re not charging enough per vehicle in relation to the claims exposure that you have to pick up. So that’s why rates are up and expected to stay up.”
Controlling costs will be key for small businesses planning for the coming year. That means embracing technology like telematics to lower expenses, investing heavily in safety and training and proactively managing your policy to adjust coverage.
Why are commercial auto insurance rates rising in 2025?
The commercial vehicle insurance sector has not had a profitable underwriting year since 2010, according to an analysis by the Insurance Information Institute. In 2024 alone, the industry lost a collective $5.5 billion.
“The disconnect between rising premiums and ongoing unprofitability in the commercial auto insurance sector highlights how rapidly and severely underlying costs have escalated,” Worters says. “Insurers have raised rates in response to mounting losses, but these increases have often lagged behind the pace of claim severity and frequency.”
Claim severity rose 78% from 2014 to 2023, a compound annual growth rate of 6.6%, according to Triple-I.
What’s driving commercial auto insurance losses?
What’s driving these losses? Inflation and litigation, particularly in the trucking industry, a key part of the commercial vehicle insurance market.
“There has been more carnage and lost money in trucking insurance than just about anything other than cataclysmic property insurance from wildfires and hurricanes,” Kerr says.
In addition, many commercial insurers have been underfunding their reserves in recent years, causing more financial headaches.
“Insurance companies set aside reserves to pay for claims. This is not for future claims, but for accidents that have already occurred and the claim is not yet settled. There is also provision for claims that may have a delay in being reported to the insurer,” says Christopher Graham, senior industry research analyst at AM Best, a financial ratings agency that focuses on the insurance industry.
“When an insurer does not have enough reserves, it means that those claims will ultimately settle for a higher amount, with the additional losses adversely affecting future results – final payments later will be more than what is reserved for today,” he adds.
AM Best estimates that these reserves for commercial auto liability are insufficient by about $4.5 billion, meaning these losses will eventually emerge, hampering future results, Graham says.
The role of legal representation and litigation on the industry
Carriers have complained for years about the rising cost of litigation and its effect on their bottom lines.
According to a study commissioned by the American Property Casualty Insurance Association (APCIA), the average cost of commercial auto claims with attorney representation jumped 21.3% over the four-year period from 2015 to 2019.
For claims that closed in 2019, the report authors note that the average loss for claims with attorney representation was more than 14 times greater than for claims without an attorney.
“Commercial auto has been hit hard,” says Jon Ward, a spokesman for the APCIA.
The APCIA study notes that attorney representation, especially early in the claims process, can lengthen the time it takes to settle a claim and increase the likelihood of a larger settlement if the case goes to mediation. It may also increase the odds of a case going to trial, potentially resulting in a “nuclear verdict” of $10 million or more.
“Nuclear verdicts” represent a tiny percentage of the overall claim volume, with less than 1% tried to a decision, according to a 2023 study by Sedgewick on liability and litigation. However, the report notes that this subset of litigated claims may account for as much as 50% or more of the total paid on all claims.
Ward blames third-party litigation funding (TPLF) for fueling the growth of litigation. TPLF, or litigation financing, is a practice where outside parties – often hedge funds or similar financial interests – fund a plaintiff’s legal expenses in exchange for a portion of the settlement.
“Commercial auto is a big target for the trial bar, and legal system abuse has been a growing problem for the last 10 to 15 years as litigation financing has become a booming business,” he says.
Data from Swiss Re confirms this. In a report released in September 2024, Swiss Re research showed that third-party litigation funding had increased the amount of U.S. liability claims by 57% over the past decade.
How inflation and tariffs affect claims and premiums
The general inflation rate in the U.S. has eased considerably from 2022-23, when it was increasing by 5% to 6% on a month-over-month basis. In June of 2025, it was up 2.9% year over year, minus volatile food and energy costs, per the U.S. Bureau of Labor Statistics.
Inflation for parts and labor is also slowing. On a year-over-year basis in Q1 2025, combined parts and labor costs rose by just 0.6% with increases of 0.2% in parts and 1.1% in labor expenses, according to a report from the American Trucking Association Technology & Maintenance Council and Decisiv Inc.
More concerning are the effects of tariffs imposed this year on most major U.S. trading partners, which may pressure prices in the near future.
“Tariffs on imported vehicles, especially commercial trucks or vans, can drive up purchase prices for fleets, leading to higher insured values,” Worters says. “Tariffs on parts such as steel, aluminum, tires and electronics make repairs more expensive. This increases claims severity, which puts upward pressure on premiums.”
The cost of commercial auto insurance in 2025
The average annual cost of a commercial auto insurance policy in 2025 is $1,762, according to Insureon, an online insurance agency/brokerage specializing in coverage for small businesses. But premiums aren’t monolithic. As with personal auto insurance, there are a number of factors that can affect how much your business pays for coverage.
Commercial insurance cost differences by industry
Perhaps no other factor is as important as the industry you’re in. A business that relies heavily on vehicles as part of daily operations, like a trucking firm or a landscaping company, poses a higher risk to insurers than a professional services company that only uses vehicles occasionally.
“Trucking is among the most expensive industries for commercial auto insurance due to the higher frequency and severity of claims, as well as the long distances traveled, heavy vehicle weights and valuable cargo involved,” says Christine Melsopp, senior sales producer for commercial insurance at Insureon.
“These factors increase the likelihood of accidents, bodily injury and property damage, making trucking a significantly riskier category for insurers to underwrite.”
Melsopp adds that the industry you’re in isn’t the only important factor.
“Vehicle usage, coverage limits, driving records and fleet size typically may have a larger impact on rates,” she says.
Average commercial auto insurance rates by industry
Below are average annual rates for commercial auto insurance by industry, as provided by Insureon.
| Industry | Cost per year |
|---|---|
| Building design | $1,614 |
| Cleaning services | $2,075 |
| Construction | $2,075 |
| Food and beverage | $2,041 |
| Healthcare professionals | $2,589 |
| IT/technology | $2,375 |
| Landscaping | $2,452 |
| Media and advertising | $2,996 |
| Photo and video | N/A |
| Professional services | $1,954 |
| Retail | $2,054 |
| Sports and fitness | $2,010 |
| Trucking | $9,794 |
State-by-state commercial auto insurance costs
Where your business is located also affects how much you will pay for commercial auto insurance. Insurance is regulated at the state level, with some states imposing more requirements on carriers than others.
“Location affects commercial auto insurance rates due to factors like state insurance regulations, accident frequency, population density, weather patterns and litigation risk,” Melsopp says.
“For example, businesses in Florida often face higher premiums because the state has a high rate of accidents, uninsured drivers and insurance fraud, all of which increase claim costs and risk for insurers.”
Below is a state-by-state breakdown of average annual commercial auto insurance rates provided by Insureon.
| State | Average annual premium |
|---|---|
| Louisiana | $3,290 |
| Florida | $3,192 |
| New Jersey | $3,155 |
| Georgia | $2,830 |
| Texas | $2,610 |
| Colorado | $2,564 |
| Arizona | $2,459 |
| Massachusetts | $2,451 |
| Maryland | $2,410 |
| Michigan | $2,229 |
| Virginia | $2,212 |
| Alabama | $2,100 |
| New York | $2,065 |
| South Carolina | $2,018 |
| Pennsylvania | $2,012 |
| Washington | $1,962 |
| Tennessee | $1,875 |
| Missouri | $1,854 |
| North Carolina | $1,776 |
| Illinois | $1,533 |
| Wisconsin | $1,669 |
| Minnesota | $1,618 |
| California | $1,352 |
| Ohio | $1,326 |
| Idaho | $1,216 |
How can businesses control their insurance costs?
With commercial vehicle insurance rates expected to keep rising into the new year, controlling costs will remain a priority. The Insurance Information Institute recommends these tips for keeping insurance rates affordable:
- Invest in fleet safety programs. Driver training, telematics systems and real-time vehicle tracking can reduce claims and qualify for discounts.
- Implement usage-based insurance (UBI). Telematics-based policies that price based on actual driving behavior can lower premiums for safe fleets.
- Manage claims proactively. Establishing in-house claims protocols and responding quickly to incidents can reduce losses and minimize litigation.
- Maintain a clean motor vehicle record. Hire drivers with strong driving histories and implement policies that discourage risky behavior. This is important because of the ongoing driver shortage, which has prompted some carriers to hire younger and less experienced drivers.
- Raise deductibles strategically. Higher deductibles can lower premiums if the business has the financial cushion to self-insure small losses.
- Bundle coverage. Package commercial auto with general liability or property policies for potential multiline discounts.
Experts don’t necessarily recommend shopping around for cheaper coverage, which they say is less likely to yield savings than in personal auto insurance.
“If you have a trucking company and an insurer that’s treating you reasonably and you’re not receiving rate increases over 5 or 6 percent, you’re staying put. There are not that many places to go,” Kerr says.
Moreover, the complexities of commercial vehicle insurance and the need for continuity in risk management, especially with telematics and safety programs, make some businesses hesitant to shop around.
“Policyholders are reluctant to do so because they have long-standing relationships with agents or brokers who understand the nuances of their business,” Worters says.
Still, if premiums skyrocket as they did a few years ago, business clients may be more apt to shop around, she says.
Telematics is the key to cost control
All of the experts consulted for this report agree: Telematics devices – such as GPS trackers, in-cab video monitors and asset and equipment tracking – can be particularly beneficial in controlling costs for businesses and insurers.
According to a 2024 report conducted for Verizon Connect, some 70% of commercial fleets use some form of GPS tracking to find more efficient routes, improve fuel efficiency and on-time delivery and track vehicle maintenance issues. All of these can help lower operational costs and drive miles – and reduce risk.
Other forms of telematics, such as video monitoring and asset/equipment tracking, can also lead to lower insurance costs. According to the report, 48% of businesses surveyed reported reduced accident costs, while 44% reported reduced insurance costs through in-cab monitoring.
“The use of AI-enabled driver-facing cameras can help reduce the likelihood of accidents by sending audible in-cab alerts for risky behaviors like tailgating, distracted driving or driving while drowsy,” the report notes.
Asset-tracking devices not only monitor equipment like trailers while being used, but they can also improve security and reduce theft and vandalism of equipment and goods. About one-third of those surveyed for the Verizon study reported a decrease in insurance costs due to using asset trackers.
“Telematics, AI, new vehicle designs – they all help. Over time, they’ll have a positive impact (on rates),” Kerr says. “This is a new age, and the cost of coverage is a huge part of a trucking company’s budget.”
Driver safety matters, too
Roadway incidents are the leading cause of work-related deaths, according to 2023 National Safety Council data — highlighting the need for driver safety training at all experience levels.
SambaSafety, a Denver-based risk management company, recommends tailoring training by driver type: younger drivers should master basic skills and licensing requirements, intermediate drivers need defensive driving and risk-reduction strategies and older drivers should stay current on technology and regulations.
“We have seen policyholders who leverage a combination of monitoring and training experience a 77% reduction in violations within one year,” the company says in a report. “Reducing risk so significantly can shift a book of business from struggling into profitability.”
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Will rates keep rising? 2025 expert predictions
“Current trends suggest commercial auto insurance rates will continue to rise. Over the past decade, insurers have faced persistent increases in claim frequency and severity, surging vehicle and medical repair costs and growing exposure to nuclear jury verdicts, which have collectively led to a hardened market and sustained rate pressure. Without meaningful improvements, i.e., slowing injury cost inflation, etc., businesses should expect continued premium increases into 2026.”
– Christine Melsopp, senior sales producer for commercial insurance at Insureon.
“There were times when it was 15 to 20 percent increases, and now in the last quarter, it was 6.7 percent. I expect something along those lines to continue throughout the next 18 months.”
– Richard Kerr, CEO of Novatae Risk Group
“First-quarter results indicate another poor year this year for commercial auto. Also, we believe the line to be under-reserved, suggesting more adverse development to come again this year. These factors will keep price increases coming at their current pace.”
– Christopher Graham, senior industry research analyst, AM Best
“There were signs in 2024 that the historic economic inflation on personal lines, especially for auto, was slowing down. Headwinds remained strong with lawsuit abuse and other factors, but some states saw only minimal increases in personal auto rates and property rate increases back in the single digits. In commercial auto, however, a reduction in inflationary pressure was offset by an increase in liability costs. Now, in 2025, with the impact of the tariffs implemented and proposed, inflationary pressure is expected to pick up.”
– Jon Ward, spokesman, APCI
Final thoughts
As rates climb, businesses that invest in telematics, safety programs and proactive risk management will be best positioned to reduce costs and remain insurable. Now is the time to audit your fleet operations, talk to your insurance broker and implement cost-saving measures that can pay off in 2025 and beyond.
“Implement safety programs,” Kerr says. “Make sure you have all the protocols in place and the safety features on your vehicles, which will result in having fewer claims. That’s going to mean you’re going to be more desirable to insurers and your rates are going to go down.”
Sources
- American Property Casualty Insurance Association. “American Property Casualty Insurance Association.” Accessed August 2025.
- American Trucking Associations Technology & Maintenance Council. “Combined Parts and Labor Costs Flat in the First Quarter of 2025.” Accessed August 2025.
- CIAB.com. “Q1 2025 P/C Market Survey | The Council of Insurance Agents & Brokers.” Accessed August 2025.
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- Federal Reserve Bank of St. Louis. “Producer Price Index by Industry: Premiums for Commercial Auto Insurance.” Accessed August 2025.
- Insurance Information Institute. “Commercial Auto Insurance Declines in Underwriting Profitability; Increasing Economic and Social Inflation Continue to Influence Costs, Says Triple-I/CAS.” Accessed August 2025.
- Insurance Information Institute. “Trends and Insights: Commercial Auto.” Accessed August 2025.
- IRU.org. “Worse than you thought: truck driver shortages and demographics.” Accessed August 2025.
- Marketscout.com. “U.S. Insurance Rates Continue Upward Trend in Q2 2025.” Accessed August 2025.
- MarshMcLennan Agency. “Q1 2025 U.S. Business Insurance Market Observations.” Accessed August 2025.
- National Safety Council. “Work Safety: Roadway Incidents – Injury Facts.” Accessed August 2025.
- SambaSafety.com. “Why Insurers Need to Offer Company Driver Training.” Accessed August 2025.
- Sedgwick.com. “Liability litigation observations and trends 2023.” Accessed August 2025.
- Swiss Re. “Litigation costs drive US liability claims by 57% over the past decade, reveals Swiss Re Institute.” Accessed August 2025.
- U.S. Chamber of Commerce Institute for Insurance Reform. “Nuclear Verdicts: An Update on Trends, Causes and Solutions.” Accessed August 2025.
- Verizon Connect. “2024 Fleet Technology Trends Report.” Accessed August 2025.
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