Personal vs commercial auto insurance

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Having appropriate insurance coverage is important to protect all of your assets—among them, your vehicle. A common question we hear from small business owners is: “What’s the difference between personal and commercial auto insurance coverage?” or “Do I need commercial auto insurance?” We’d like to help clarify. It’s important to understand what each type of policy covers to ensure you’re not leaving yourself vulnerable to a potential loss.

What’s the difference between personal and commercial auto insurance?

Personal auto insurance 101

Like the name suggests, personal auto insurance is designed to protect individuals or families using a vehicle for personal use. Personal use of a car does include driving to and from work, and some business use. For example, a real estate agent that drives to and from listings would be covered under their personal policy. Canadian drivers are legally obligated to carry insurance when operating a vehicle. In fact, the fine for not having insurance coverage as a vehicle owner, lessee or driver can range from $5,000 to $50,000. While every auto insurance policy is different, there are standard coverages that are almost always included. Here are a few of the common types of personal auto insurance coverages:

  • Third party liability coverage, which helps protect you if someone is killed or injured, or their property is damaged in an accident for which you’re found at fault.
  • Statutory accident benefits coverage, which provides you with some financial assistance (such as medical, rehabilitation coverage and income replacement) if you are injured in an automobile accident.
  • Uninsured automobile coverage, which will help protect you and your family if you’re injured or killed by a hit and run driver or by a driver who doesn’t have insurance.

Commercial auto insurance 101

Whether you’re a contractor driving between construction sites, or a bakery owner completing your deliveries—if you own a business that requires the use of a company vehicle, you need commercial auto insurance. Commercial auto insurance is designed to fit the needs of your business, rather than your personal needs and policy options can vary from one insurance company to another. It’s important to understand what is and what isn’t included in your policy to ensure you’re not leaving yourself vulnerable to risk and potentially a loss. Some important coverage components for small business owners include:

  • Injury to you, your employed drivers or passengers including medical expenses and lost wages.
  • Loading and unloading liability for when you’re transporting products to customers or events.
  • Replacement car coverage for when your commercial vehicle is being repaired so you don’t miss out on work. This is also available for personal policies as well.
  • If you operate your commercial vehicle in other provinces or states, additional coverages can often be purchased to ensure you and your employees are covered during those trips.

How to decide if you need commercial auto insurance coverage

Some business owners are under the impression that their personal insurance policy will cover their vehicle when it’s being used for business, but that isn’t always the case. If you’re a small business owner, and you’re unsure if you need commercial auto insurance, there are a few questions you can ask yourself to help figure it out.

  1. Who owns and operates the vehicle? If you’re a sole proprietor who operates your business out of your home and doesn’t travel between jobsites or make customer deliveries—it’s likely that your personal policy is protection enough. If your vehicle is owned by the business and used for business needs such as deliveries or transporting equipment, you should have commercial auto insurance coverage. Any full-time employees that use the vehicle for business purposes should be listed as drivers on your commercial auto insurance policy.
  2. How is the vehicle used on a daily basis? Let’s say you’re a contractor driving between jobsites, with your expensive tools and equipment in the back of your truck. If you’re involved in an accident and those tools are damaged, your personal policy may not cover the repair or replacement costs. You should have commercial auto insurance coverage if you use your vehicle for any of these reasons:
  • You transport or deliver goods, materials or merchandise
  • You transport equipment or tools
  • Your vehicle is used for driver training
  • You transport customers for any reason (for example, you operate a limousine service or taxi service)
  1. What type of vehicle are you using? Like personal insurance policies, the type of vehicle you drive will have an impact on the type of coverage you need. Bigger, heavier commercial vehicles often cause more damage if they’re involved in an accident and your coverage should reflect that. If you use an SUV, Jeep, Truck, Tractor, trailer or any vehicle specifically designed for construction or maintenance purposes, you should have commercial auto insurance coverage.

Other common questions about commercial auto insurance

Will my commercial auto insurance policy cover personal use? Personal use is usually covered in your commercial policy, but it’s always best to be sure before making a decision on an insurance provider and policy. Always check with your broker or agent before assuming you’re covered.

How much does commercial auto insurance cost? Every policy is different and there are a number of different factors that go into determining what your auto insurance premiums will be. There are some things you can do to lower your car insurance premiums, and if you’re a small business owner, supplementary insurance coverage is tax deductible.

I’m a rideshare driver. Do I need a rideshare insurance policy? You should always check with your insurance company to see if your personal auto policy allows for ridesharing and if you require any additional commercial insurance coverage. Some ridesharing companies are now partnering with insurance companies to offer commercial insurance coverage to all their drivers.

Where can I purchase commercial auto insurance? There are number of different commercial auto insurance providers in Canada. It’s important to do your research to ensure you’re partnering with a trustworthy and reputable insurer. If you’re interested in getting more information or a quote for your small business auto insurance needs, you can call our dedicated TruShield representatives today at 1.844.429.9480. We’ll do our best to guide you through the process as quickly and painlessly as possible.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage – see policy for details.