A personal car insurance policy usually has a number of exclusions when it comes to accidents that take place while you’re on business. That’s where commercial car insurance comes in. Policies can be shaped to fit your business size, coverage needs and more so you get the right protection for the right price.
When accidents happen on the job, personal car insurance won’t cover business vehicles, so you might be on the hook for any damages. Commercial car insurance is designed to protect any vehicle used for commercial purposes, including fleets, tractors and trucks.
Commercial car insurance provides many of the same types of coverage as personal auto insurance, but often includes much more, like higher liability limits and coverage for hired vehicles and employees.
The main factor that separates personal and commercial car insurance is what you’re transporting and why. Designed to protect both businesses and employees, commercial car insurance policies are available in many industries, including:
Joe, like many pizza delivery drivers, uses his own vehicle for work. His personal car insurance covers him on his commute to work, but coverage stops as soon as he clocks in.
If he gets in an accident on the job, damages won’t be covered because the insurance company deems his job as a delivery driver an unapproved use of the car. He could have to pay out of pocket for damages.
Adding a commercial rider or taking out a commercial car insurance policy protects his vehicle while at work.
What kind of commercial coverage do I need?
Just like personal car insurance, there are a handful of different types of commercial car insurance coverage.
Collision coverage. Covers the cost to repair or replace a vehicle after an accident.
Comprehensive protection. Covers damage caused by factors other than an accident. This could include weather damage, theft and vandalism.
Liability insurance. Protects companies and drivers who are considered at fault for damage or injuries caused in an accident.
Medical liability coverage. Pays for the medical costs of drivers or passengers injured in a company vehicle.
Uninsured or underinsured coverage. Provides increased coverage if another driver harms your vehicle or employee and doesn’t have enough insurance to cover damages.
What additional coverage should I consider?
While availability may vary by insurer, location and other factors, these common additional extras can help increase your coverage:
Workers compensation. Pays for lost wages if one of your employees is unable to work following a car accident.
Specialized vehicle coverage. These policies can cover things like vans, trucks, busses, tractors and other vehicles that aren’t covered under a standard policy.
Fleet insurance. If you have a rental car company or dealership, this type of coverage can protect your inventory or fleet.
Personal effects coverage. Covers personal items if they’re lost when stored in a work vehicle.
No-deductible glass repair. Pays for windshield and other glass repairs without you having to pay anything out of pocket.
Gap insurance. Covers the remaining balance on a vehicle if it’s totaled when you still have an outstanding loan.
Fellow employee coverage. Protects your business from claims if one employee injures another.
Towing and labor costs coverage. Provides roadside assistance and covers the cost of towing and labor if company vehicles break down on the road.
Rental reimbursement coverage. Covers the cost of rental vehicles while your insured vehicles are being repaired or replaced.
Non-owned automobile liability coverage. Covers employees driving their own vehicles for your business.
Loading and unloading liability. Liability coverage when loading or unloading a covered vehicle results in injuries.
How much does commercial car insurance cost?
The cost of commercial car insurance can vary depending on your choice of provider and many other factors. For example, a simple cargo van for a local caterer or restaurant might cost less than $1,000 annually to insure, while a cab company or limo service could pay $5,000 to $10,000 per vehicle.
How to get cheap car insurance for business
Reduce your risk in these areas if you can and you’ll reduce your premiums.
Vehicles. The type of vehicles you drive will have a direct effect on the cost of coverage due to factors like the value, usage and cost of repairs.
Number of vehicles and drivers. The more drivers and vehicles you want to insure, the more you’ll pay for coverage.
Travel distance. Insurance for local pizza delivery restaurants would likely be cheaper than insurance for a coast-to-coast trucking company.
Coverage types. Just like personal car insurance, the types of coverage you purchase affect your rates.
Coverage limits. Higher coverage limits to pay for more expensive vehicles or cargo will increase the cost of insurance.
Storage area. Where your vehicles are stored will affect insurance.
Location. Accident rates, population density and other factors can vary by location.
Deductible. A higher deductible can help reduce your rates, but you’ll have to pay more out of pocket when you make a claim.
Cargo type. If you’re carrying high value or fragile cargo, expect to pay more for insurance.
Credit history. While it is not permitted in some provinces for providers to check your credit score when you apply for car insurance, you may have the option in others. A lower credit score could increase your premiums.
Driving history. If you or your employees have poor driving histories or records of multiple claims, you might end up paying more for coverage.
How do I compare commercial car insurance?
As with any major financial decision, it’s important to compare your options before deciding which policy is right for you. Consider these factors:
Coverage limits. Repair and hospital bills can be expensive, so it’s important to find coverage limits that suit your business.
Exclusions. Ask about any potential exclusions in your policy to prevent gaps in coverage or denied claims.
Combine commercial policies. If you’re shopping for other types of commercial insurance, find out if providers offer bundling discounts or umbrella policies.
Laws and regulations. Make sure that any policy you consider meets your province or territory’s minimum coverage requirements.
Office locations. If you prefer to deal with your provider or agent in person, make sure there’s an office nearby.
Payment terms. Look for a provider that offers payment terms that meet your businesses needs.
Additional extras. Not all providers offer the same coverage options, so shop around for the best coverage.
Price. Every provider calculates costs differently, meaning pricing for the same coverage can vary. Compare quotes to get the best price and consider a provider that specializes in coverage for your industry.
Fleet management. Many insurers offer safe driver discounts or training programs to help you manage your fleet.
How much commercial coverage do I need?
Every province and territory has different requirements for commercial coverage, much like personal auto insurance. And you’ll also have to contend with your class of truck and sometimes federal regulations on top of that.
Third-party liability coverage is mandatory for all commercial vehicles. Check with your local ministry of transportation to find out the minimum requirements for your specific type of business and vehicles.
How do I apply for commercial car insurance?
The steps to purchase coverage are different with every provider, but purchasing commercial car insurance isn’t too different than personal car insurance.
Visit your insurer’s official website.
Click Get a quote or call the phone number provided.
Submit all necessary information about the vehicles and drivers.
Adjust coverage limits and optional extras.
Get your quote and confirm details.
Enter payment information.
What to watch out for
Commercial car insurance is a great way to protect your employees and vehicles, but there are still a few things to watch out for.
Exclusions. Like most insurance policies, your commercial car insurance policy may have exclusions. This may include intentional damage, improperly licensed drivers, specific driving activities or restricted areas.
Coverage for non-employees and hired vehicles. Unless you purchase the add on, you might not have coverage when driving vehicles not owned by your company.
Equipment. Some policies may not cover equipment inside or on your vehicles.
Cargo. Find out if cargo is covered by a standard commercial car insurance policy or if you need additional cargo coverage.
Coverage limits. Coverage limits vary, so make sure your policy meets provincial/territorial and industry minimums.
License status. Ensure that all drivers have the right license status and that their license is up to date, otherwise you may be denied coverage.
Commercial car insurance is necessary for any business that relies on the use of vehicles for everyday operation. It can protect your vehicles on and off the road and, with the right add-ons, provide additional coverage for other essentials for your business.
Some personal use is often covered by commercial policies, but you should check with your provider to make sure.
It depends on your policy. Most commercial car insurance policies don’t cover vehicles that are not owned by your company. However, you may be able to add rideshare coverage to your policy.
Filing a commercial car insurance claim isn’t much different than filing a personal car insurance claim. Make sure you have all information related to the incident, then contact your agent or provider to get started.
Filing frequent claims may lead to higher premiums, but it depends on your policy, who was at fault and other factors.
Yes. Many providers offer discounts when you purchase multiple types of coverage or insure more than one vehicle. Check with your provider to find out if you’re eligible for any commercial car insurance discounts.
Peter Carleton is a writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading.
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