Auto insurance is not just a wise choice for protecting your vehicle from damages, it’s a legal requirement across Canada. As a self-employed professional or small business owner, it’s essential to understand whether you should opt for commercial or personal auto insurance.

Both commercial auto insurance and personal auto insurance provide coverage for vehicles. However, they differ significantly in terms of their coverage, eligibility, and intended use by the province in which you live.

Here’s an overview of the differences between them to help you make an informed decision:

Commercial auto insurance vs personal auto insurance

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What Does Personal Auto Insurance Include?

Personal auto insurance, also called private-passenger auto insurance, is designed to cover vehicles for personal use. For example, driving to the cottage for a weekend or going to the grocery store. Depending on the coverage in the policy and the coverage limits you choose, it can pay for damages to your vehicle and your medical expenses following an accident.

Although the mandatory coverages and coverage limits vary by province, a standard or mandatory private-passenger auto insurance policy typically includes the following: 

  • Third-party liability: Covers another motorist’s or person’s medical expenses and property damage following an accident if you are deemed to be at fault. Most provinces require a minimum $200,000 coverage limit for third-party liability.
  • Accident benefits: Covers your medical and rehabilitation expenses if you’re injured in a car accident, regardless of who’s at fault. 
  • Uninsured auto: Covers damages to your vehicle and your medical expenses if you’re in an accident with a driver of another vehicle who is uninsured or in a hit-and-run incident.
  • Direct compensation-property damage (DCPD): This coverage allows you to deal with your insurance provider directly for compensation if you are hurt or your vehicle is damaged in an accident for which you are not at fault.

What Does Commercial Auto Insurance Include?

Commercial auto insurance is designed to cover vehicles used for commercial purposes. That is any vehicle or trailer used to transport people, packaged goods, raw materials, or hauling equipment. For example, if you drive to client meetings, make deliveries, or haul tools and equipment to a construction site.

Like personal auto insurance, commercial auto coverage also has mandatory coverages and coverage limits determined by the province where your business is located. The mandatory or standard coverages are essentially the same: third-party liability, accident benefits, uninsured auto, and direct compensation-property damage (DCPD).

However, unlike personal auto insurance, there are four primary benefits that commercial auto insurance provides to business vehicle owners:

1. Higher Coverage Limits

A coverage limit is the maximum amount your insurance provider will pay for an insurable loss during the policy’s term. Commercial auto policies offer higher coverage limits than personal auto policies since there’s a probability that damages involving a business vehicle will result in more expensive damage claims.

2. Covers A Wide Range of Vehicles

Commercial auto insurance covers many business vehicles that personal auto insurance might not. Commercial auto insurance covers cars, pickup trucks, vans, and trailers for hauling equipment and protects delivery trucks, food trucks, and construction vehicles.

3. Coverage Extends to Multiple Employees

Commercial auto insurance extends to multiple employees who drive company vehicles or share driving responsibilities for a single company vehicle. In contrast, a personal policy covers the primary driver and family members listed on the policy.

4. Legal and Regulatory Compliance

There may be legal and regulatory requirements for your business to comply with regarding the use of business vehicles, including commercial auto coverage. For example, for construction, trucking, and transportation services.

What Optional Coverages Can Be Added to a Commercial Auto Policy?

You can add optional coverages to your commercial auto policy to increase your protection. Among the most common are: 

Collision or Upset Insurance

Collision or upset auto insurance pays for losses to your vehicle following a collision with another vehicle, a stationary object, or if it rolls over in a crash, regardless of who’s at fault for the accident.

Comprehensive Insurance

Comprehensive auto insurance covers damages caused by theft, vandalism, natural disasters, extreme weather, flying or falling objects, fire, or collisions with wildlife if an animal darts out in front of you unexpectedly while driving.

All-Perils Auto Insurance

All perils insurance is a combination of collision and comprehensive coverages. It also includes coverage for damage or loss to your vehicle if it’s stolen by one of your employees or someone who lives with you.

Specified Perils Auto Insurance

Specified perils coverage is like comprehensive insurance but costs less because you only pay for protection for specified risks or perils. It includes protection from theft, fire, and damage caused by extreme weather (like hail or a windstorm). It doesn’t cover damages caused by vandalism or collisions with wildlife.

Furthermore, if your business has five or more business vehicles, buying a fleet vehicle insurance policy is more economical than purchasing individual policies for each company vehicle.

How to Get Low-Cost Commercial Auto Insurance in Canada

Protecting your company vehicles from expensive damages with a customized, low-cost commercial auto insurance policy is easy through Zensurance.

Our experienced brokers, trusted by hundreds of thousands of small business owners and independent professionals across Canada, are here to help you get the tailored commercial auto coverage you need, providing you with a sense of security and trust in our service.

It only takes a few minutes to fill out our online application for a free quote. We’ll shop our partner network of more than 50 insurers to get the affordable policy you require.

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About the Author: Shelly Petrie

Shelly Petrie is a Team Lead, Digital Solutions Team, Zensurance.