When Do I Need Commercial Auto Insurance?

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Businesses come in all shapes and sizes, which is why knowing what commercial insurance coverage you need can be confusing – especially when it comes to commercial auto insurance. 

Having the right insurance coverage can make or break a business. While most commercial insurance policies feature coverage like general liability and property insurance, not all policies feature commercial auto insurance. But that doesn’t mean you don’t need it. When purchasing a commercial insurance policy, you will need to carefully consider if your business requires commercial auto insurance. 

This article breaks down when commercial auto insurance might be necessary, how it can protect your business and answers the FAQ when do I need commercial auto insurance?

Commercial Auto Insurance
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What is personal auto insurance?

Personal car insurance is designed to protect all drivers, passengers, and vehicles on the road. It is intended for people using their vehicles for personal use, such as driving to the grocery store, going on road trips, or commuting to work. Personal auto insurance is mandatory for all drivers in Canada. In Ontario, personal auto insurance policies must include the following four coverages: 

  • Third-party liability coverage: This coverage protects the driver if they are at fault for a collision that results in third-party property damage or bodily injury. Ontario drivers must carry a minimum of $200,000 in third-party liability coverage at all times.
  • Direct compensation – property damage coverage: This coverage protects your vehicle and its contents if you are not at fault or partially at fault for an accident. 
  • Uninsured automobile coverage: If you get into a collision with an uninsured or underinsured driver, or if you are the victim of a hit-and-run, uninsured automobile coverage can help cover the costs. 
  • Accident benefits coverage: This coverage type will pay for medical expenses, ranging from prescription medications to rehabilitation, if someone is injured following a collision, regardless of who was at fault for the collision. 

What is commercial auto insurance?

Like personal auto insurance, commercial auto insurance aims to protect drivers, passengers, and vehicles on the road. However, it is specifically aimed at protecting vehicles used for business purposes. Whether you are a contractor transporting materials between construction sites or a food delivery driver, commercial auto insurance is necessary to cover commercial vehicle use. If you or your employees operate vehicles for business purposes and someone gets into an accident, your personal auto insurance policy likely won’t cover you, as most exclude business use. 

How to determine if you need commercial auto insurance

Wondering whether commercial auto insurance is necessary for your business? Generally speaking, if a vehicle is used for business purposes, a commercial policy may be important. To help you determine if you need commercial auto insurance, we’ve put together the following list of criteria:

  • Use of the vehicle: If you or your employees frequently drive a vehicle for work purposes, such as to deliver products to customers, transport equipment, or provide customers with a service, you will likely need a commercial auto insurance policy.
  • The owner of the vehicle: If there are vehicles owned and used by your business, you should have a commercial auto insurance policy, under which any employees who drive the vehicle(s) are covered. 
  • Type of vehicle you drive: Commercial auto insurance may be especially important for businesses that use large commercial vehicles for business purposes, as they can cause more damage on the road.

Scenarios in which commercial auto insurance may be required

There are many circumstances, and scenarios businesses can find themselves in where commercial auto insurance may be required. If any of the following scenarios ring true for your business, then odds are you should purchase commercial auto insurance coverage.

  • If you transport goods, materials, or merchandise in your vehicle
  • If you conduct a service with your vehicle
  • If you haul tools or equipment or tow a trailer used to conduct your business in your vehicle
  • If your employees operate the vehicle for business purposes
  • If the ownership of the vehicle is in the name of a corporation or partnership
  • If your vehicle is used for driver training
  • If your transport people/customers in your vehicle for a fee (e.g. Uber, a limousine or taxi service)

Types of businesses that may require commercial auto insurance

The following types of businesses (among others) often require commercial auto insurance policies: contractors and construction companies, delivery services, taxi, limousine, or rideshare services, driver education companies, sales companies that conduct off-site visits, and maintenance companies. 

Three questions to help you determine if your business needs commercial auto insurance

Not sure if you need commercial auto insurance? Answer the questions below to help you determine if commercial auto insurance is right for your business. 

  • How is the vehicle used? If you or your employees drive cars for work purposes other than commuting, such as to deliver or transport products, services, or materials, a commercial auto insurance policy is likely necessary.
  • Who owns and operates the vehicle(s)? If you have vehicles registered in your business’s name, you likely need commercial auto insurance.
  • What type of vehicle is being used? If your business uses large vehicles, like trucks, tractors, tailors, or vans, for business purposes, you likely need commercial auto insurance, as these types of cars can cause more damage on the road.

The benefits of commercial auto insurance coverage

The benefits of commercial auto insurance coverage are endless. With this type of policy, your business and its fleet of vehicles can be covered in a wide range of circumstances. For example, your commercial auto insurance policy may include third-party liability coverage, accident benefits coverage, uninsured automobile coverage, collision coverage, comprehensive coverage, and more. 

Contact ALIGNED to find out if your business needs commercial auto insurance. 

Still, aren’t you sure if your business needs commercial auto insurance? Contact ALIGNED today. We are commercial insurance experts and would be happy to offer our unbiased, objective opinion on whether commercial auto insurance is right for you. Click Here To Get A Quote or contact one of our business insurance experts for information or with any questions you may have.

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