Anyone whose job demands they drive their own car for the purposes of their work will need to pay for business car insurance. This is different to a standard policy, which only provides cover for social use and commuting.
Business car insurance can cover a wide range of uses, such as travelling between different work locations, visiting customers or driving around other employees. Anything, in fact, that’s on behalf of the company.
Although you’ll likely pay higher premiums for business car insurance, don’t be tempted to run the risk of sticking with standard cover. This could lead to your policy being invalidated.
Know what you want
Every insurer will want the answers to a number of key questions when you’re applying for business car insurance, so you need to have your answers ready.
For example, they’ll want to know the nature of your work, the amount of time you’ll be behind the wheel, and how many work-related miles you’re likely to clock up during an average year.
This may be difficult to gauge, of course, but an estimate will give them an idea of how much time you’ll be spending on the road.
Understand the different levels of cover
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Unfortunately there isn’t one standard business car insurance policy. There are a range of options and it’s down to you to decide which type is most suited to your particular needs.
Most policies will fall into one of the following three categories:
Business use by you — these policies can cover the main driver — often with the option to add a spouse — to drive in connection with their business, including away from their normal place of work. This could be a salesperson, for example.
Business use for all drivers – these offer a similar level of cover as the option above, but with the additional benefit that more than one driver can be included on the policy.
Commercial travelling policies – these can cover people who drive as a permanent aspect of their job. These individuals will be spending a lot of time on the road, and this is likely to be reflected in the policy price.
Because these policy types are complicated and consist of lots of different factors. So it’s best to check the terms and conditions and confirm directly with the insurer that the policy fully covers you before you buy.
Get a good deal
To get a competitive price, you need to compare a selection of quotes to find the most cost-effective option for you.
Also, speak to others who use their cars in their day job to find out which insurers you should be considering.
And don’t be afraid to bargain with an insurer to get the best deal — they all have some degree of flexibility in the premium. Remember, this is an increasingly competitive field and there is no shortage of providers.
Cutting the cost
As well as the business itself, the cost of cover will depend on the car being driven, so it’s worth considering an economical car with a small engine. Not only will the running costs be lower but they also tend to benefit from lower premiums.
Other ways to reduce your premium include installing security devices like immobilisers, steering locks and tracking systems. You can find more tips to reducing premiums in our guide.
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Having appropriate insurance coverage is important to protect all of your assets—among them, your vehicle. Some common questions we hear from small business owners include: “What’s the difference between personal and commercial auto insurance coverage?” and “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.
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What is personal auto insurance?
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.
What is commercial auto insurance?
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.
Answer these 3 questions to find out if you need commercial auto insurance:
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.
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.
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)
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.
Did you answer yes to any of these questions?
You may need commercial auto insurance for your small business.
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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.
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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.