Commercial Vehicle Insurance for Small Businesses Explained

Smiling male sitting behind the wheel of his car. He is holding out a cardboard box with food towards the passenger window.

Commercial Vehicle Insurance for Small Businesses Explained

One of the most common questions our brokers get is “Do I need commercial vehicle insurance for my small business?” Unfortunately, there is a lot of misconceptions about what is covered by your personal car insurance. What’s worse, is if you fail to notify your insurance company and do not have the proper insurance policy in place, your claims could be denied. But have no fear, commercial vehicle insurance for small businesses will be explained in this article.

How do I know if I need commercial vehicle insurance for a small business?

If you’re only using your vehicle for commuting to and from your place of work, you don’t have to worry about getting commercial vehicle insurance for small businesses. This changes, however, if you’re doing one of the following actions:

  • Getting paid for transporting passengers
  • Driving to work sites or to regularly visit clients
  • Regularly transporting employees
  • Carrying of work-related materials
  • Making work-related deliveries
  • Having work-related tools or equipment installed on your vehicle
  • Allowing employees to drive your vehicle
  • If your vehicle is owned/leased by a corporation, partnership, or registered by a business

Keep in mind that this isn’t a complete list. You should talk to your broker about how you use your vehicle for full details on whether or not you need commercial vehicle insurance for your small business. However, if you use your personal vehicle for any of those tasks, you should purchase commercial vehicle insurance for small businesses. You must also have this specialized policy if your vehicle is registered in your company’s name. Remember, your general business insurance won’t cover vehicles.

What about my personal car insurance policy?

Generally, your personal car insurance policy will not extend to using your vehicle for commercial purposes. Additionally, you will not be covered for any job-related materials stored inside your vehicle or equipped to it. Why aren’t you covered? Generally, insuring a commercial vehicle for a small business has different levels of risk than a personal vehicle. You’re more likely to have valuable materials, you may drive more, and you may be at higher risk of being sued if you’re involved in an accident.

It’s important to remember that every insurance company is different. Yours will inform you as to what type of use is allowed. Talk to your broker for more details on what your car insurance policy covers and when it’s time to make the change to commercial vehicle insurance for small businesses.

Commercial Vehicle Insurance vs. Personal Car Insurance

Basically, the difference between the two boils down to how you use your vehicle and how much coverage is offered in the event of an accident or damages while using your vehicle for work purposes. If you use your vehicle for anything other than commuting, your personal car insurance will likely not offer any coverage. Even if it does, it may not be enough. Commercial vehicle insurance policies often have greater liability coverage as businesses often have higher liability risk. Your work-related materials and equipment may also be covered.

The Government of Alberta and the Government of Canada also have insurance requirements for certain commercial vehicles, which can include:

  • Cargo Insurance
  • Liability Insurance
  • Passenger Insurance

Even if you only have one vehicle for your small business, you still need to abide by the rules and protect the financial security of your small business.

What does commercial vehicle insurance cover for small businesses?

Commercial vehicle insurance varies depending on your insurer and your industry. There are many customized insurance policies that fit the needs of your small business. The three main areas of coverage include:

  • Liability – Covers third party injury and property damage.
  • Collision – Covers the repair or replacement of your vehicle if you’re involved in an accident.
  • Comprehensive – Covers the repair or replacement of your vehicle if you suffer a certain type of damage, such as storm, fire, or vandalism.

 

 

As always, check in with your independent insurance broker. They can help you evaluate your insurance needs and answer your questions.

4 Tips For Using Commercial General Liability Insurance to Protect Your Business

An insurance broker and two employees reviewing their commercial general liability insurance policy.

4 Tips for Using Commercial General Liability Insurance to Protect Your Business

Commercial general liability insurance helps protect your business, no matter what industry you’re in. Also known as a CGL policy, this coverage is the starting point and essential for any company. Here are 4 tips to help you make the most out of your commercial liability insurance to protect your business:

  1. Take advantage of risk management resources.
  2. Understand what is and what isn’t covered.
  3. Use your broker as a resource.
  4. Consider your CGL policy as a last line of defence.

We’ll discuss these each in a little more detail below.

 

1. Take Advantage of Risk Management Resources

As part of your commercial general liability insurance, you should have access to a variety of risk management resources. These are provided by insurance companies or associated third parties to help you minimize your chance of injury or property damage occurring on your business premises or wherever you operate. This can include everything from a phone line staffed with experts to training webinars to brochures and pamphlets. These resources are a great way to protect your business and learn how to handle potential lawsuits. For example, check out the Insurance Bureau of Canada’s risk management resources.

2. Understand What Is and What Isn’t Covered with Your Commercial General Liability Insurance

Commercial general liability insurance is basic coverage for all businesses, regardless of the industry you operate in. It protects you if you’re held liable for bodily injury or property damage to third parties. It will help reimburse you for your legal expenses, including any settlements and awards, up to your policy limit. You’ll also be required to pay a deductible. For example, let’s say someone walks into your store or office in the winter and slips in the front entrance. They fall and break their arm. They hold your company liable for damages. This type of scenario would likely be covered by your CGL policy.

But not everything is covered. For example, if you’re sued for causing financial loss as a result of your advice or professional service, you wouldn’t be covered by this type of policy. You’d need a professional liability insurance policy (also known as errors & omissions insurance) in order to protect yourself in that scenario.

That’s why it’s critical that you understand your policy, including what is and what isn’t covered. You should also understand how your insurance works and what you need to do in the event of a claim (or if you’re aware you might need to make a claim).

3. Use Your Broker as a Resource

Your broker is there to help you. Not only do they do the price shopping and research to find you competitive quotes that match your company’s insurance needs, but they’re also there to answer your questions and advocate you through the claims process. They’re there to ensure you’ve got the insurance you need and to help you will all things related to insurance. They can provide additional risk management resources and help you understand your coverage.

4. Consider your CGL policy as a last line of defence.

Insurance should always be your last line of defence. While you may be covered, you’ll still need to pay a deductible and your policy has limits. You may also see a rise in your premiums after a claim (although this is not always true). Plus, lawsuits aren’t many people’s idea of fun.

Your insurance should be just one part of a risk management plan to protect your business’ financial security. If you can prevent lawsuits in the first place, you will likely save money in the long run and save you from many headaches that come with legal action.

Do I need commercial general liability insurance?

In short, yes. This is essential, basic coverage to protect your business if someone is injured or has their property damaged while on your company’s premises. Lawsuits can be extremely costly, and this insurance provides you with a measure of financial security and peace of mind. It’s also important to note that some contracts require insurance coverage.

Talk to one of our brokers for more information or to get a quote today. They can help you determine your small business’ insurance needs and which commercial general liability coverage suits you best.