Do you use your personal vehicle for business purposes? If you do and get into a collision, there’s a good chance your personal auto policy will not cover you for the damages.

Whether you manage a small business that has a couple of SUVs or are a self-employed contractor with a single utility van or pickup truck, you need a commercial auto insurance policy to cover the cost of damages to your wheels.

What Is Commercial Auto Insurance?

Also known as commercial vehicle insurance or business auto insurance, commercial auto insurance covers the cost of damages to any vehicle used for business purposes, including cars, vans, trucks, and trailers. It typically includes coverage for an injured driver’s medical expenses.

A fleet of commercial utility vans.
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Whether your business has one car or up to five vehicles to transport people, materials, or packaged goods, it’s essential to have a customized commercial auto policy to protect you from third-party liability and property damage. Most personal car insurance policies in Canada do not provide coverage for accidents or incidents that may occur to a vehicle used for business.

If your business has five or more vehicles, you may require a commercial fleet vehicle insurance policy to ensure you’re covered.

What Coverages Are Included in a Commercial Auto Policy?

Like a personal auto policy, a commercial auto policy includes mandatory coverages required by the province where you reside. These statutory coverages and the coverage limits may vary depending on your jurisdiction:

Third-party liability

Third-party liability provides financial support if you are responsible or at fault for an accident resulting in property damage, personal injuries, or death to another person.

It will pay for the other driver’s medical costs, vehicle repairs, and property damage. It will also cover any legal expenses you face from a lawsuit. Most provinces require you to carry a minimum of $200,000 of third-party liability coverage. But it’s wise to increase that limit since the cost of another person’s medical bills can easily exceed the minimum. If you are sued for the accident, it is likely to surpass the minimum coverage required by the province.

Accident benefits

Accident benefits typically feature four types of coverage:

  1. Income replacement, non-earner, and caregiver benefits. Income replacement applies if you are unable to work because of your injuries. You may claim up to 70% of your gross income. Non-earner benefits come into play if you don’t qualify for income replacement and may compensate you with $185 per week. Caregiver benefits are triggered if you cannot care for a dependent such as a child, because of a catastrophic injury.
  2. Medical rehabilitation and attendant care benefits. Medical and rehabilitation benefits apply for your medical expenses not covered by your provincial health care plan. Attendant care benefits pay to hire someone to care for you at home or in a medical facility if you require assistance to dress, bathe, and use the bathroom. Usually, this coverage is capped at $65,000 for non-catastrophic injuries and $1 million for catastrophic injuries.
  3. Death and funeral benefits. In the unfortunate event you die because of injuries in a car accident, your spouse may receive up to $25,000, and each of your dependents or children up to $10,000. Another $6,000 is allotted to pay for your funeral expenses.
  4. Miscellaneous benefits. Statutory accident benefits also include coverage for miscellaneous expenses, including lost educational expenses if you’re a student, damage to your clothing, prescription eyewear, and other medical devices. It also provides for the cost of medical examinations and housekeeping if you need to hire someone to help maintain the upkeep of your home because of your injuries. Additionally, it covers any expenses incurred by family members who lived with you at the time of the collision and who visited you while recovering.

You do have the option to increase the limits within your accident benefits coverages. However, be advised increasing your coverage limits also increases the cost of your annual premium.

Uninsured auto

All drivers in Canada must be insured to drive legally. However, it is estimated that 2% of all drivers on the road drive without insurance. If you are involved in a collision with an uninsured motorist deemed to be at fault for the crash, an unidentified motorist, or a driver who commits a hit-and-run, uninsured automobile insurance will pay for damages to your vehicle, your injuries, or if you are killed.

Direct compensation-property damage (DCPD)

DCPD compensates if you are hurt, or your vehicle is damaged in an accident you did not cause. Because you are not at fault for the accident, you can directly file a claim to your insurance provider for compensation.

Here’s a breakdown of what a standard or basic commercial auto policy includes in Alberta, Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island:


Mandatory coverages in Alberta include:

  • Third-party liability ($200,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage

Uninsured auto insurance is not mandatory in Alberta. It is recommended you add the standard endorsement form (SEF) 44 to your policy, which is designed to provide coverage for injuries or deaths resulting from a collision with an uninsured or underinsured driver who’s at fault for the accident.

Alternatively, compensation for bodily injuries you suffer because of a collision with an uninsured driver who’s at fault for the accident or a hit-and-run incident may be available through Alberta’s Motor Vehicle Accident Claims program.


Mandatory coverages in Ontario include:

  • Third-party liability ($200,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage
  • Uninsured auto

New Brunswick

Mandatory coverages in New Brunswick include:

  • Third-party liability ($200,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage
  • Uninsured auto

Nova Scotia

Mandatory coverages in Nova Scotia include:

  • Third-party liability ($500,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage
  • Uninsured auto

Newfoundland and Labrador

Mandatory coverages in Newfoundland and Labrador include:

  • Third-party liability ($200,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage
  • Uninsured auto

Prince Edward Island

Mandatory coverages on P.E.I. include:

  • Third-party liability ($200,000 coverage minimum for any single accident)
  • Accident benefits
  • Direct compensation-property damage
  • Uninsured auto

Other provinces, including British Columbia, Manitoba, and Saskatchewan, feature government-run, public auto insurance regimes. Quebec has a hybrid auto insurance system. Zensurance does not provide commercial auto or fleet vehicle insurance in these provinces or Canada’s northern territories.

Commercial Auto Insurance Optional Coverages

There are optional coverages you may wish to add to your policy to ensure you have comprehensive protection. Among the most common optional coverages small business owners add to their commercial auto policies are:

Collision or upset coverage

Collision insurance covers the cost of damages to your vehicle if you’ve been in an accident with another car or an object, such as a streetlight. It pays to repair or replace your vehicle (if it’s a total loss) minus a deductible. Without collision coverage, you alone are responsible for paying to repair or replace your damaged vehicle.

Comprehensive coverage

Comprehensive coverage for your vehicle does not mean you’re covered for everything. For example, it pays for damages or losses resulting from natural disasters and severe weather, fire damage or explosions, vandalism and theft, falling objects, and damage from a collision or impact with animals minus a deductible. 

All perils coverage

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.

Employers’ Hired and Non-Owned Auto Liability

Covers the cost of damages to vehicles your business rents or leases or vehicles owned by your employees used for business purposes.

How to Get a Commercial Auto Insurance Policy in Canada

Get a free quote from Zensurance by filling out our online application (it only takes a few minutes), and speak to one of our licensed brokers about your commercial auto policy needs. 

Unlike an agent who works for one insurance company, our insurance brokers work for you. They can answer your questions, recommend the types of coverage you need, and find the policy you need at the lowest premium possible.

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About the Author: Joe Sarraino

Joe Sarraino is a Team Lead, Contractors, at Zensurance.