Commercial car insurance, also called commercial vehicle insurance or business auto insurance, is insurance protection for commercial motor vehicles. In Canada, any vehicle used to transport clients, materials, goods, tools or equipment, generally requires commercial coverage.
A commercial car insurance policy is similar to a personal-use one. Mandatory components of both, include accident benefits coverage, third-party liability coverage, direct compensation property damage and uninsured automobile coverage.
With commercial insurance, additional coverages are available to cover specialist equipment (e.g. an aerial ladder on a fire truck), or industry-specific usage. Some popular commercial add-ons include coverage for trailers attached to your vehicle, and loading/unloading liability for delivery vehicles.
The rule of thumb is that if any aspect of your job requires you to drive on a regular basis, you need commercial auto insurance. This does not include your daily commute, which is covered by your personal policy.
Sometimes the distinction between a personal vehicle and commercial vehicle is clear:
1. If you drive a vehicle with a gross weight of at least 10,000 pounds or a load capacity of at least 2,000 pounds, it needs commercial insurance. The same is true if your vehicle has specialized equipment such as hydraulic lifts or loading ramps.
2. If you have a normal car, but driving is a core part of your employment (e.g. driving instructor, taxi driver, or pizza delivery person), you require commercial car insurance. Without your vehicle, the commercial enterprise could not exist.
Other times, the distinction between personal and commercial use is less obvious:
1. Let’s suppose that you are a handyman driving between job sites with your tools in the trunk, or a self-employed real-estate agent, driving from house to house to see clients. For both of these examples, commercial car insurance is required.
2. If you occasionally use your vehicle for business reasons, but it is not a regular occurrence, you probably don’t require commercial insurance but check with your insurer. They may modify your existing, personal policy to cover occasional business use, but it won’t cost as much as a dedicated commercial policy.