Did you know that injuries caused by transport incidents cost a total of $3,617,497,205 dollars in 2018 in Canada? If you're in a motor vehicle accident, the costs for injuries and repairs can quickly add up.
That's why having personal or commercial auto insurance is imperative. However, when do you need commercial auto insurance? In addition, what does it cover?
Keep reading, and this guide will walk you through everything you need to know about commercial auto insurance.
Who Is Commercial Auto Insurance For?
Commercial auto insurance is different from personal car insurance because it is coverage for your business vehicles. This coverage will cover any vehicles that your company uses for only commercial purposes.
It can cover trucks, pick-ups, cars, vans, and more. Whether you're a small business or big business, if you have vehicles that you use for business purposes, they need to get covered by commercial auto insurance.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance will cover what you need for auto insurance on vehicles utilized by your business. Instead of paying for the damages yourself, your commercial auto insurance will cover you.
This can help keep your business from ending up with repairs that are too costly. Depending on your policy, what's covered might vary.
However, there are some basic things that your insurance will cover.
Liability coverage will help pay for injuries to others or property in a car accident where you're at fault. This means that if you are sued for causing an accident, your liability insurance will cover the cost of the damages.
Commercial auto insurance also includes collision insurance. This can cover accidents caused by you or others.
However, it can also cover collision costs that come into play due to a natural disaster or vandalism.
If you or a passenger needs medical care after an accident, commercial auto insurance will cover the medical bill. With the cost of medical care, this can be a huge help when it comes to costs related to an accident.
Keep in mind that commercial vehicle insurance only covers medical costs if it happens when driving your commercial vehicle.
If you or one of your employees is in an accident and property gets damaged, this part of your insurance will cover you. Remember, not only will you be responsible for the cost of the property damage, but you'll also be responsible for the cost of vehicle repairs.
If you get sued for damages in a car accident that involves your commercial vehicle, commercial auto insurance can help. Your plan will keep you covered and help you navigate the complications of a lawsuit.
Uninsured Motorist Coverage
Did you know that in Ontario, it's estimated that there are 2,000 vehicles involved in an accident every year that are uninsured? In addition, it's estimated that around two percent of all drivers on the road don't have insurance.
While everyone should have insurance, that's not always the case. If a driver doesn't have insurance, this part of your commercial insurance plan can help cover the costs.
Types of Commercial Auto Insurance
There are a few different types of commercial auto insurance to consider. Your insurance needs might be different based on the size of your business and your industry.
However, there are a few common types of commercial auto insurance.
Every business is going to have different requirements for their insurance. If you want a plan that meets your specific needs, look for insurance companies that offer customized plans.
This will allow you to choose what is essential for your business. You can meet with your insurance company and write up a policy that meets your needs.
Plans Based on Vehicle Size
The coverage needed for a truck will look a lot different than what might be needed for a car. You can pick plans that cover big or small vehicles.
Because the financial cost of repairing either vehicle is vastly different, you want a policy that gets based on your potential costs.
Single Vehicle Plan
Does your company have only one vehicle versus a fleet? You can get a commercial auto insurance plan that covers a single vehicle.
Even with a single-vehicle plan, your vehicle can get driven by you or employees.
Third-party liability insurance covers a person that is not related to your business but comes into contact with it. For example, customers, suppliers, partners, distributors, clients, and others that interact with your business but aren't associated with it in other ways would be a third party.
Third-party liability insurance will cover property damage or bodily injury that a third party claims your business is responsible for. For example, if you regularly transport clients as part of your business and you are in a car accident, third-party liability can help cover those costs.
Direct Compensation - Property Damage
Direct compensation Property Damage Insurance or DCPD insurance provides you compensation when you are injured, or your vehicle is damaged in an accident that wasn't caused by you.
Instead of having to jump through hoops and deal with the other party's insurance, you deal with your own insurance. This means you do not need to wait extended periods of time for the at-fault parties insurance company to make a determination.
In addition, you won't need to worry about having to sue the driver who is at fault. This is great to have for any policyholder.
Accident benefits cover you, pedestrians, and passengers who get injured in an accident. For accident benefits, it doesn't matter who was at fault.
These benefits can cover:
- Income replacement
- Rehabilitation treatment
- Other recovery services
- Funeral expenses
- Compensation for family members in the case of a fatality
It's also going to help if the car accident kills someone. This type of coverage is mandatory in Canada.
The only areas exempt are Labrador and Newfoundland. In Ontario, accident benefits cover more than what is listed above.
If an individual injured in the accident can no longer provide care for their dependents, accident benefits can help. This benefit will provide compensation for an alternative caregiver.
There are other expenses that are covered in Ontario too. Some of these include:
- Replacing items damaged in the accident
- Home maintenance
- Lost educational expenses
In addition, if you're not able to lead a normal life and don't qualify for the caregiver benefit or income replacement, accident benefit can offer compensation here as well.
What’s Not Covered by Commercial Auto Insurance?
While you can tailor your commercial vehicle insurance plan, there are still a few things that won't get covered. Knowing what gets covered and what doesn't is essential because it could change how you do things for your business.
Personal Vehicles and Leased Vehicles
Does your employee drive a personal vehicle for work? If so, they aren't automatically covered by your business' policy.
In addition, they might not get covered by their own insurance if they're in an accident while working.
Your commercial auto insurance also won't cover leased vehicles.
If you want your commercial auto insurance to cover leased or personal vehicles, you will need to add additional coverage. This coverage will be "Hired or Non-Owned Vehicles."
It's specifically for cars that your business does not own.
Do your employees take work vehicles home or run personal errands with them? If so, this should get covered by your commercial auto insurance.
However, even though it should get covered, there may be limits. You will want to talk to an insurance agent about personal use and what those limits might be.
Common Exclusions of Use
There are some other instances where your vehicle might not get covered. If one of your hired employees uses your commercial vehicle while committing a crime or causes intentional damage with your vehicle, it might not get covered.
In addition, it might not cover accidents that are caused by employees who have been drinking or using drugs.
What to Look for in a Company that Offers Commercial Auto Insurance
When it comes to choosing your commercial auto insurance, what should you look for? There are a few features we recommend you keep an eye out for.
Companies that Provide Additional Optional Coverage to Customize Your Plan
The ability to customize your plan to meet your needs is very important. We discussed this some above.
Your coverage needs might be different based on what the vehicle's getting used for or your industry.
It lists different add-ons you can get for your plan.
They also list optional coverage add-ons that could be beneficial to your policy.
If your vehicle is damaged in an accident that's not a collision, you'll want to have comprehensive insurance. Some of the losses it can cover include:
- Hitting an animal
This is optional coverage. However, it's a good one to have to protect your business finances.
Don't get stuck on the side of the road and end up paying expensive towing costs. If your vehicle breaks down, you want to know you will have roadside assistance on the way.
You can get this covered in a commercial auto policy.
Because this is mandatory in the majority of Canada, you want a company that provides this insurance. Remember, as discussed before, the only places in Canada where you don't need this coverage are Labrador and Newfoundland.
When you drive your vehicle off the lot, it begins to depreciate. If you're in an accident and your vehicle gets totalled, or your vehicle gets stolen, you don't want to have to worry about getting paid a lower value because of depreciation.
Replacement cost prevents this from happening by making sure you get the original value of the vehicle instead of the depreciated value. This is great because it helps your company replace the vehicle without having to worry about incurring huge costs.
Typical Costs of Commercial Auto Insurance
The cost of your commercial auto insurance is going to be dependent on a few factors. Some of these factors include:
- Type of commercial vehicles
- Number of vehicles
- How often vehicles are driven
- Your driving record
- Employees driving record
- Coverage and optional coverages chosen
However, the median cost of commercial auto insurance per month is $142/mth. That equates to $1704 a year.
However, here's some good news, 44 percent of small business owners pay less than $1500 a year for their policy.
How to Save Money on Commercial Auto Insurance
If you're a savvy business owner, you know finding ways to save money without cutting corners is important. The same is true when it comes to your commercial auto insurance.
There are a few ways you can save money here.
Maintain a clean driving record, and you can keep your costs low. Many companies have policies around employees who have an accident or moving violations for this reason.
If even one driver has a history of violations, it can impact your premium.
Get Multiple Quotes
Don't just go with the first insurance company you find. Spend time getting quotes and comparing the insurance companies and limits for coverage.
Work with an Agent
When you are working with an agent, make sure they are experienced. They can help you ensure you have the right coverage and point you towards discounts.
Bundle Your Coverage
Many insurance companies have deals for bundled coverage. You could bundle your commercial auto insurance with your business insurance or even your personal car insurance.
Do you and your employees already practice good driving habits? If so, using telematics can help you get a reduced rate on your policy.
Telematics record information like how fast you drive, how far you drive, and how often you brake. This can get recorded through an app or a device plugged into your vehicle.
If you're already practicing good driving habits, this is a great way to get a discounted rate.
Prepay Your Annual Cost
Some companies offer discounts if you pay with a lump sum instead of monthly payments. This can take up to 15 percent off your premium.
Consider Your Deductibles
If you're willing and able to pay a higher deductible, you can adjust your deductibles and get a lower rate. However, only utilize this method if you can afford the deductible when filing a claim.
Choosing the right commercial auto insurance is important to ensure that your business is protected. If you or your employees are involved in an accident, you want to make sure you're covered.
Are you ready to get covered? We're here to help you find the right insurance for your business. Request a quote today.