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.