Commercial vehicle insurance: Do you have the right coverage?

If you have a truck, pickup, van or car that you use for work, you might be wondering whether your personal auto insurance covers you when you’re transporting work equipment, making deliveries or driving around doing other things for work. As a rule of thumb, anyone who uses their vehicle for work may need to consider commercial auto insurance, but it all depends on the nature of your work and how you use your vehicle. Wondering whether you might need coverage? Read on for the main things you should know.

Commercial vehicle insurance is a type of automobile insurance designed for vehicles used by a business. Unlike personal auto insurance, it accounts for risks associated with business activities such as making deliveries, travelling between job sites and multiple employees driving the same vehicle.

That might seem straightforward, but in practice the difference between the two isn’t always clear. If you’re not sure whether commercial auto insurance is right for you, the first step is to determine whether your vehicle is being used for business or personal purposes. A vehicle that’s used for business typically needs commercial motor vehicle insurance. This is true even if the vehicle is registered in your name instead of the company’s name. That’s because the coverage you need is usually determined by how the vehicle is used, not who owns it, though this may vary by province or territory. So the question is: what do you use your vehicle for? If you’re still not sure, it’s smart to check with your insurance company.

As a rule of thumb, a vehicle is considered a commercial vehicle if it’s used to perform business operations or deliver services.

This includes but is not limited to:

• Meeting with clients or transporting materials and equipment to construction sites
• Making deliveries to consumers
• Supplying goods to businesses or points of sale
• Letting employees use the vehicle to carry out their duties
• Using vehicles with attached machinery or major alterations for commercial purposes

If you use your vehicle for personal purposes only, such as commuting to and from the office, you’re not using it for your business and you don’t need commercial car insurance.

That said, it’s always a good idea to check and see which coverage you need, as some cases fall into a grey area. For example, if you’re self-employed or the vehicle’s use changes throughout the year, you may want to review your insurance policy with your insurer to make sure it reflects how you actually use your vehicle for your business.

As soon as you use your vehicle for commercial purposes, it’s considered a commercial vehicle, even if it’s not a delivery vehicle or a heavy commercial vehicle. An ordinary car can count as a commercial vehicle if you use it for business activities. Here are some examples of vehicles that are typically covered by commercial vehicle insurance.

* Heavy commercial vehicles: > 4,500 kg (gross vehicle weight rating)

** Light commercial vehicles: ≤ 4,500 kg (gross vehicle weight rating)

Your commercial vehicle insurance coverage options may vary depending on the type of vehicle you have, the kind of business you do and where in Canada your business is based. That said, most insurance policies work the same way: you have your basic coverage, and then you can get whatever optional and specialized coverage you need added on to design the right policy for your business.

Commercial vehicle insurance generally includes basic coverage for certain risks associated with the day-to-day use of a vehicle for business purposes, including civil liability or third-party liability coverage. Basic coverage could protect you if, for example:

• You’re at fault in an accident
• Your vehicle is damaged
• Your vehicle causes property damage to someone else’s vehicle

Since coverage requirements are different in every Canadian jurisdiction, we recommend carefully checking your policy wording before your commercial vehicle hits the road.

Depending on where you live, you may have access to optional coverages that suit your business needs. For example, some options might help you:

• Safeguard the value of a newer vehicle
• Get liability for damage to non-owned auto coverage
• Offset the financial impact if your vehicle is temporarily out of service

Since coverage requirements are different in every Canadian jurisdiction, talking to your insurance company can help you figure out which insurance policy options are available and make the most sense for your business.

Standard commercial vehicle insurance doesn’t necessarily cover every situation. Each province and territory has different specialized coverage options, such as coverage for occasionally renting or borrowing a vehicle for business use.

If the way you use vehicles in your company or industry is different from what’s in your insurance policy, it’s best to speak with your insurance company to find out what they recommend.

The rules might seem cut and dried on paper, but in real life it’s not always easy to decide whether you need commercial vehicle insurance or specialized coverage. The two examples below illustrate how it works in practice.

Mark specializes in sanding and refinishing hardwood floors. Every week, he drives to and from job sites in his pickup truck carrying tools and materials. His truck is essential to his small business.

Is Mark’s personal auto insurance enough? No. He needs commercial insurance, because he’s using his vehicle to transport the materials he needs for his work. That means his pickup truck isn’t just a way to get around, it’s an essential part of his business operations.

Sophie owns her own flower shop and has her own commercial vehicle. During her busiest times of year, like Mother’s Day and Valentine’s Day, she sometimes borrows a larger vehicle from a friend so she can make more deliveries.

If Sophie gets into an accident in her friend’s vehicle, will she be covered by her commercial vehicle insurance? Not necessarily. Sophie’s commercial coverage won’t necessarily extend to her friend’s vehicle, even though she’s using it for her business. In cases like this, commercial vehicle insurance is required for Sophie and specialized coverages usually need to be added to the core insurance policy as well. Sophie’s example shows how important it is to check your coverage before you get behind the wheel of someone else’s vehicle, especially since specialized coverages vary depending on your province or territory.

If your business operations require the use of a vehicle, that vehicle is very likely considered a commercial vehicle by your insurance provider—and that means different insurance risks than a personal vehicle. Even then, not all commercial risks are the same! While a construction company and a flower shop might both use commercial vehicles, they aren’t both going to have the same insurance needs.

That’s why we’ve designed our commercial vehicle insurance to be customizable to your business, whether you’re managing one vehicle or a whole fleet. While coverage, options and discounts may vary by province or territory, our goal’s always the same: to provide insurance solutions and client support tailored to your business and the way you operate.