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Do I Need Commercial Auto Insurance?

Posted by  On March 1, 2021
Need for Commercial Auto Insurance

While auto insurance is mandatory in Canada, having any old auto insurance policy might not necessarily mean you have the right coverage. Having the appropriate coverage is of the utmost importance to protect your assets, especially your vehicle.

Small business owners frequently ask us, “What’s the difference between personal and commercial auto insurance coverage?” or “Do I need commercial auto insurance?” If you own a business and use your vehicle for business purposes, you’ll want to speak to your broker about commercial auto insurance.

Or, if you or your employees are required to get behind the wheel, you might also need a commercial auto insurance policy. The following is an overview of commercial auto insurance and what determines if you need it and which type of car insurance you should purchase.

What is commercial auto insurance?

You could be an independent contractor travelling between construction sites or a baker delivering cakes. If you own your own business that requires a vehicle, you will need commercial auto insurance.

Commercial auto insurance is specially designed to fit the needs of your individual business versus your personal needs. Policy options will vary from one insurance company to another, so it’s essential to understand what is and isn’t included in your policy. This will help you determine you are not leaving yourself vulnerable to any risks or potential losses.

Commercial auto insurance will cover you in cases where personal car insurance won’t. You might also hear it referred to as “commercial fleet” coverage or “fleet insurance” when a business requires insurance for a larger number of vehicles. If you transport your goods with your vehicle, then you may also need insurance that covers your cargo.

Some important insurance coverage factors for business owners include:

  • injury to you or your employed drivers or passengers, including any medical expenses or wages, lost
  • loading and unloading liability when you are transporting products to customers or travelling to events
  • replacement car coverage when your commercial vehicle is being repaired
  • Tools of your trade or other work materials you may store in your vehicle between jobs
  • out of province coverages if you make these kinds of trips

How do you know if you need commercial auto insurance?

Some business owners assume that they won’t need commercial auto insurance because their personal policy will cover their vehicle despite it being used for business. But this is not always the case. Here are a few questions you can ask yourself.

Who owns and operates the vehicle?

If you are a sole proprietor and do not need to travel between job sites or make deliveries, your personal policy may provide the coverage you need. But if you use your vehicle to make deliveries or transport equipment, then you need commercial auto insurance. If you have full-time employees who use the vehicle for business, then they should also be listed as drivers on your commercial policy.

How is your vehicle used day-to-day?

You should get commercial auto insurance coverage if you use your vehicle for any of the following reasons:

  • you transport or deliver goods, materials or merchandise
  • you transport your equipment or tools
  • your vehicle is used for driver training
  • you transport customers for any reason

What type of vehicle are you using?

The type of vehicle you drive will have an impact on the type of coverage you need. Any vehicles that are heavier cause more damage, and your policy will have to reflect this. If you use an SUV, truck, trailer, or any other vehicle designed for construction or maintenance purposes, you should have commercial auto insurance.

Commercial Auto Insurance Coverage Options

You can tailor your commercial auto insurance to whatever specific needs your business has. Coverage options include:

Bodily Injury Liability Insurance

Bodily injury liability insurance coverage will pay for any physical injuries or fatalities in an at-fault accident. If an injury victim files a claim against you in court, your coverage will also cover lawyer and court costs.

Collision and Comprehensive Coverage

This insurance will cover physical damage to your vehicle in the event of an accident, theft or damage from another type of insurable mishap. This coverage is critical for a business owner in order to keep your vehicles on the road without the burden of costly repair bills to foot on your own.

Property Damage Liability Insurance

This coverage will pay for any property damage you cause in an accident in which you’re at fault. Like bodily injury coverage, property damage liability insurance will cover your legal and court fees if you are sued following a car accident.

If you’re still unsure you need commercial auto insurance, it’s a great idea to review your personal insurance policy. It’s a bad idea to assume your personal car insurance will cover you. You wouldn’t want to be surprised after an accident and learn that your policy doesn’t cover you.

The first step you should take is to check your personal car insurance policy and see if it lists exclusions or limits for accidents that involve a business. Your personal car insurance policy is not designed to cover accidents that involve a business or business owner. Most insurance companies are clear about what their policies cover or don’t cover. If you’re confused about whether or not you will need commercial auto insurance, you can get clarity from your insurance broker.

To learn more about commercial auto insurance, call Archway Insurance at 1-833-536-0529 or contact us here for all your insurance needs in New Brunswick, Nova Scotia and Prince Edward Island.

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