What is commercial auto insurance?
Commercial auto insurance, also known as commercial vehicle insurance or business auto insurance, provides coverage for vehicles such as cars, trucks, vans, and trailers used for business purposes. Any vehicle that is used to transport materials, tools and equipment, packaged goods or people should have a commercial auto policy.
Why do you need commercial auto insurance?
Independent contractors and small business owners need to safeguard themselves from third-party liability and property damages that may occur when using any vehicle for business purposes. Most personal car insurance policies do not cover accidents or incidents for any vehicle that’s used for business.
What does commercial auto insurance cover?
A standard commercial auto policy in Canada is like the coverages in a personal car insurance policy. For example, a personal car insurance policy includes:
- Third-party liability: Provides protection if you’re at fault in an accident for injuring or killing someone or damaging their property.
- Direct compensation-property damage (DCPD): DCPD covers your vehicle, its attached contents (such as the dashboard infotainment system), and the loss of use of your vehicle if you are partially at fault or not-at-fault for an accident. DCPD means you deal with your insurer directly instead of suing the other driver for damages.
- Accident benefits: If you are injured in an auto accident, accident benefits pay for your medical bills and rehabilitation regardless of whether you are at fault for an accident or not. You have the option of increasing your accident benefits coverage limit. Speak to your broker about what your options are.
- Uninsured auto: If you’re involved in an accident with an uninsured motorist or an unknown driver who commits a hit-and-run, your uninsured auto coverage will pay for damages to your vehicle.
Are there additional coverages for a commercial auto insurance policy?
There are optional coverages you can add to a commercial auto policy, such as:
- Collision or upset coverage: Collision coverage helps pay to repair or replace your vehicle if it’s damaged or a total loss resulting from an accident with another vehicle if you are at fault for the accident. If you don’t have collision coverage in your commercial auto policy, you alone are responsible to pay for damages to your vehicle resulting from a collision.
- Comprehensive coverage: Despite its name, comprehensive coverage does not mean you’re covered for everything. In auto insurance terms, comprehensive coverage protects your vehicle from damages resulting from a natural disaster, severe weather like hail that damages a windshield, vandalism, and theft.
- All perils coverage: All perils coverage is a combination of collision and comprehensive coverages. It also covers you for damages if an employee or member of your household steals the vehicle.
- Specified perils coverage: As its name suggests, specified perils, or named perils, is coverage that protects your vehicle from the perils specifically named in your policy, like theft or weather-related damage such as hail.
How much does commercial auto insurance cost?
The cost of a commercial auto insurance policy involves several factors, including:
- Your driving record and years of experience behind the wheel
- The type of vehicle you drive
- Your age and gender
- Where you live or where the vehicle is typically parked
- How many kilometres you drive annually
Different insurers offer varying premiums based on these and other factors. That’s why it pays to have a broker shop around on your behalf and find you a policy that suits your needs at an affordable price.