Everything You Should Know About Commercial Auto Insurance in Canada

Commercial auto insurance protects you, your business, your employees, and your company’s vehicles. Many business owners believe they can get away with personal vehicle insurance, but that’s far from the truth. Individual plans do not cover your work automobiles!

Below, you’ll find everything you need to know about commercial vehicle insurance and how we can help you save money on your policy.


What Is Commercial Auto Insurance?

Commercial auto insurance, often called commercial vehicle insurance or business auto insurance, covers your work vehicles (trailers, vans, trucks, cars, etc.). Automobiles you utilize for transporting goods, people, tools, equipment, or materials should have their own policy.


But What’s the Difference Between Commercial Auto Insurance and Personal Auto Insurance?

At a basic level, it appears that both types of insurance do the same thing. And that’s true — they both offer you financial relief and give you the resources to recover from various perils.

However, they differ in policy limits, threat types, and risk levels. Not to mention that commercial policies can cater to numerous employees and various businesses. They’re highly customizable.


The Types of Commercial Auto Insurance

Depending on your type of business, you should choose one of the following commercial auto insurance:

  • Business use — Solo entrepreneurs, small businesses, and home-based businesses typically choose this type of commercial auto insurance. It’s designed for those who use their vehicle to meet clients. You can add “business use” to your personal policy without buying a standalone commercial policy.
  • Business for numerous drivers — If numerous employees use your automobile, you should take out this type of insurance. Bear in mind that you must be the vehicle’s owner to do so.
  • Commercial auto use only — If you have a vehicle you use solely for business reasons, this policy is for you. Most people with the commercial auto use only policy use their vehicle every day and often have extra features and equipment attached. For instance, a building contractor may install a tool rack into their pickup truck.


Who Needs Commercial Auto Insurance?

Small business owners and independent contractors benefit greatly from the third-party liability and property damage protection offered by commercial vehicle insurance.

You should definitely take out this type of insurance if any of the following apply:

  • Your vehicle is registered in your company’s name.
  • Your vehicle has work equipment installed.
  • You use your automobile for work purposes only.
  • You deliver employees, clients, products, or materials via a vehicle.
  • Your employees use the vehicle.


What Does Commercial Auto Insurance Cover?

The general commercial auto insurance policies in Canada cover the same aspects as personal car insurance plans. Taking out an auto policy covers you in the following areas:

  • Accident benefits — Accident benefits pay for your medical and rehabilitation bills if you’re injured in a vehicular accident. The policy pays out no matter whether the accident was your fault. With most policies, you can request a higher accident benefits limit when you speak to your broker initially.
  • Third-party liability — If someone is injured, killed, or their property is damaged in an accident that was your fault, third-party liability protects you.
  • Direct compensation property damage — DCPD covers your vehicle, the loss of your vehicle, and your vehicle’s attached contents (dashboard system, etc.) if you’re not at fault or partly at fault for an accident. You can deal directly with your insurer instead of needing to sue the other party for damages.
  • Uninsured auto — If the other party in an accident is uninsured or somebody commits a hit-and-run, this part of your insurance policy pays for the damage to your vehicle.


Should You Opt for the Additional Commercial Auto Insurance Coverages?

Our highly experienced team can connect you with the right insurance broker with the perfect additional coverages for you. Depending on your needs, you can pick from:

  • Specified perils coverage — Sometimes called named perils, it covers your vehicle from the disasters explicitly named inside the policy. The perils usually included are as follows:
    • Theft or attempted theft
    • Hail
    • Lightning
    • Fire
    • Earthquake
    • Explosion
    • Rising water
    • Hail
    • Windstorm
    • Falling or a forced landing of an aircraft or its parts
    • Civil commotion
    • Riot
    • Damage during transport on water or land, such as a train derailing, burning of a truck carrying the vehicle, and a ship sinking
  • Comprehensive coverage — While it would be nice if comprehensive coverage truly protected you from everything, that’s not the case. It covers your vehicle from natural disaster damage, severe weather such as hail, theft, and vandalism.
  • Collision or upset coverage — This optional coverage gives you the funds to pay for the replacement or repair of your vehicle if it’s written off or damaged during an accident that was your fault. Without this, you will be responsible for paying for the damages.
  • All peris coverage — It’s a mixture of comprehensive and collision coverages. However, it also protects your vehicle if an employee or somebody you live with steals it.


Alongside the optional coverages above, you can pick from an extensive list of endorsements (i.e., more add-on coverages). They allow you to do a variety of things, as you’ll see below:

  • SEF 6 — You can carry passengers for money with this endorsement.
  • SEF 4 — It allows you to carry a variety of dangerous materials.
  • SEF 21 (Fleet) — It’s the endorsement for fleet insurance only.
  • SEF 20 (Lose of Use) — If your commercial vehicle is dealing with a covered claim, you can make a claim under this endorsement for the cost of public transit, rental cars, and taxis to help you or your employee travel around.
  • SEF 36 — If you have registered your personal vehicle in your business’ name and want to use it for personal use solely, this endorsement enables you to do that.
  • SEF 35 (Emergency Service Expenses) — It covers towing costs and any emergency service fees following an accident.


How Much Does Commercial Auto Insurance Cost?

You should expect to pay more for commercial auto insurance than personal car insurance. Eleven main factors affect your specific premium price. They are as follows:


#1 Your Deductible

The deductible is the amount of money you have to pay in a covered claim. If you want to lower your monthly premium payments, you should increase your deductible.


#2 Your Vehicle’s Age

The older your vehicle, the more expensive your insurance becomes, as you’ll typically need to repair it more often.


#3 Your Policy’s Limit

The policy limit is the maximum amount your commercial auto insurance pays out if you make a claim. Some insurers offer different limits for separate clauses of the policy.

As for how it affects the total premium cost — the higher the limit, the more you’ll pay.


#4 Where You Store Your Business Vehicle

Are your vehicles parked on the road, in a garage or in a secured compound? Your premiums decrease the safer your vehicles are from theft and damage.


#5 Your Claims History

If you have a history of consistent claims, insurers see you as a higher risk and, therefore, raise your premiums.


#6 Your Vehicle’s Make and Model

Higher-end commercial vehicles are more expensive to insure and maintain. So, you should expect to pay a higher price for your insurance.


#7 Your Driving Record

Your insurer assesses your driving record, alongside any employees named as the driver of the vehicle. Bad records can significantly boost the price.


#8 Your Business’ Location

The crime and claim rates of your working neighborhood impact the price. Additionally, the likelihood of natural disasters can decrease or increase the cost accordingly.


#9 Your Policy Add-Ons

The more add-ons you choose, the more expensive your policing becomes. However, that doesn’t necessarily mean you shouldn’t choose the optional coverages.


#10 Your Vehicle’s Usage

How your company uses your vehicles and how often you use them affects your insurer’s policy rate. The locations you travel to can influence the price too.


#11 The Number of Vehicles You’re Insuring

The fewer vehicles you wish to insure, the cheaper the cost of your policy.


Why Does Commercial Auto Insurance Cost More than Personal Car Insurance?

Insurers see driving for work as riskier than driving for personal reasons. That is, unarguably, the primary reason behind commercial auto insurance costing more. However, there are other reasons, including:

  • Work vehicles often have multiple drivers.
  • They are targeted for theft more often than personal vehicles.
  • Work vehicles are generally driven during peak traffic hours, increasing the risks of damage and accidents.
  • You are likely to travel through unknown areas to meet clients or attend job sites.
  • Additional equipment and valuable tools are usually kept in or attached to the vehicle.
  • The increased use of the vehicle brings a higher likelihood of issues presenting themselves.
  • The manufacturer’s suggested retail price (i.e., the MSRP) is usually higher for commercial vehicles.


Are There Discounts for Commercial Auto Insurance?

You can often find discounts from some insurers if you have a clean driving record, are claims-free, and have an existing business policy with the insurance provider.

The discount percentage depends on a variety of factors. But, generally speaking, you can save around 15% by talking to your broker about your eligibility. For instance, you should think about taking out commercial fleet insurance if you plan to insure more than five vehicles, as you’ll save a lot of money.


How to Save Money on Commercial Auto Insurance

Aside from talking to your broker or agent, you should consider doing the following things to help lower your commercial auto insurance costs:

  • Offer or require specific driver training — Your employees should understand how to complete their duties to the correct standard. If they need to drive in less-than-pleasant conditions, you should provide advanced driver training.
  • Vet all your drivers — Your driver’s records impact the overall cost of your commercial auto insurance. Just one speeding ticket can astronomically increase the price. It’s typically not worth the extra costs to employ a driver with a poor record.
  • Be very selective with who you allow driving your vehicles — Only let employees drive if they’re good at it and need to do so to fulfill their duties. The more people on your insurance policy, the more expensive it becomes.
  • Use winter tires when appropriate — During the cold months, installing winter tires makes your commercial vehicles safer, decreasing your insurance premium.
  • Ensure clear rules and safety protocols — Enforce driving-specific safety procedures and monitor them regularly. Not only does unsafe driving put your employee in harm’s way, but it also affects other road users and your business.
  • Use tracking and anti-theft devices — Many insurers offer discounts if you install anti-theft devices in your work vehicles.
  • Keep up with regular maintenance — Keeping a logbook is a necessity in some industries. But even if it isn’t a requirement in your market, it’s good practice.


Why Choose LiabilityCover?

We make acquiring commercial auto insurance in Canada easy. After just one phone call or online form, we get you connected with an industry specialist insurance broker. It shouldn’t be hard to guarantee complete coverage — and with us at LiabilityCover, it isn’t.

No matter where you are, you can access our online form and quickly acquire the commercial auto insurance you need from a licensed agent or broker.


Frequently Asked Questions


Can You Insure Tools Under a Commercial Auto Insurance Policy?

You need to add an insurance endorsement called tools and equipment coverage to insure your tools. It gives you the funds to repair or replace damaged or lost tools, accessories, and equipment.

Anything valued at less than $1,500 is deemed a tool. Anything valued above that figure is called equipment.


Do You Need Commercial Vehicle Insurance for Transporting Clients?

If you transport clients or use your own vehicle to fulfil commerce activities, you need to have commercial vehicle insurance because your liability risks are higher.


Is a Pickup Truck Classed as a Commercial Vehicle?

Almost all Canadian provinces deem pickup trucks as commercial vehicles if used for business reasons. With that said, you should check with your province’s transportation ministry to be on the safe side.