In Canada, every vehicle must be insured by law, but not all auto insurance is designed for commercial use.
For business owners, this distinction matters. Standard personal auto insurance often does not cover accidents that happen while a vehicle is being used for work. That’s why commercial auto insurance is strongly recommended for any business that owns, rents, or relies on vehicles as part of its operations.
However, if your business owns five or more vehicles, a commercial fleet auto insurance policy is usually more cost-effective and easier to manage than purchasing separate policies for each vehicle. Fleet policies also simplify renewals, billing, and coverage changes as your business grows.
But what if your business doesn’t own any vehicles at all? Or what if employees regularly use their own cars for business tasks, such as making deliveries, visiting clients, or transporting equipment?
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In these situations, hired and non-owned commercial auto insurance helps protect your business from financial losses if a vehicle is damaged or involved in an accident.
What follows is a breakdown of hired commercial auto insurance, commercial non-owned auto coverage, what’s in a basic or mandatory business vehicle policy, and a few other optional coverages you can add to a basic policy to maximize your protection.
Hired vs. Non-Owned Commercial Auto Insurance: What’s the Difference?
Hired commercial auto insurance covers vehicles your business rents, leases, or borrows for work purposes.
Non-owned commercial auto insurance covers vehicles owned by employees but used for business activities.
Both coverages are designed to protect your business – not the vehicle owner – from liability claims and related legal costs.
What Is Hired Commercial Auto Insurance?
Hired commercial auto insurance covers vehicles you hire, rent, or lease for your business, including pickup trucks, vans, and SUVs. It is an optional type of coverage you can include in a basic or mandatory business vehicle policy.
In other words, hired commercial auto insurance fills the coverage gap when your business temporarily uses vehicles it does not own.
For example, if you need a truck to deliver goods but don’t own one, hired commercial auto insurance would protect you in case of accidents or damage while using the rented vehicle for work.
What Is Commercial Non-Owned Auto Coverage?
Commercial non-owned auto insurance protects your business if an employee causes an accident while using their personal vehicle for work-related activities.
It does not replace the employee’s personal auto insurance. Instead, it provides additional protection for your business if you’re named in a lawsuit or held financially responsible for the incident.
However, hired and non-owned commercial auto insurance generally does not apply when a vehicle is used for personal reasons, including commuting to and from work or running personal errands.
What’s In a Basic or Mandatory Commercial Auto Insurance Policy?
Commercial auto insurance includes mandatory coverages set by provincial law. While coverage names and limits vary by province, the following protections are typically required:
- Third-party liability: covers property damage, bodily injury, or death caused to others if you’re at fault. Most provinces require at least $200,000, though higher coverage limits are strongly recommended.
- Accident benefits: Cover medical and rehabilitation expenses for you and your passengers, regardless of fault. Minimum limits typically include $65,000 for non-catastrophic injuries and $1 million for catastrophic injuries, with options to increase coverage.
- Uninsured auto: Covers vehicle damage and certain medical expenses if you’re injured or killed by an uninsured or unidentified driver, including hit-and-run incidents.
- Direct compensation-property damage (DCPD): Pays for damage to your vehicle and loss of use when another driver is at fault, allowing you to claim directly through your own insurer.
However, for DCPD to apply, most provinces require that the incident occurs in their jurisdiction, involves at least one other vehicle and that one of the vehicles in the accident (yours or the other driver’s) is insured in that same province.
What Other Optional Commercial Auto Insurance Coverages Are There?
Optional coverages help protect your business vehicles from physical damage and loss beyond what mandatory insurance provides, and allow you to tailor your commercial auto policy based on how your vehicles are used and how much risk your business can absorb.
Common optional commercial auto coverages include:
- Collision or upset coverage pays for damages to your vehicle if you are at fault for an accident with another car or trailer, if the surface of the ground damages your vehicle, like after hitting a pothole in the road, or an object lying on the ground, such as a dead animal.
- Comprehensive coverage covers damages to your vehicle caused by fire, water, theft, vandalism, natural disasters, explosions, hail, wind, lightning, earthquakes, falling objects, and collisions with wildlife or an animal that was beyond your control, such as an animal suddenly darting out in front of you while driving.
- Specified perils coverage pays for damages to your vehicle that are specifically named in the policy and are caused by fire, water, theft, natural disasters, hail, wind, lightning, explosions or earthquakes.
- All-perils coverage is a combination of both collision and comprehensive insurance. It also includes coverage for damage and loss of your vehicle if it’s stolen by an employee or someone who lives with you at your primary residence.
How Do Deductibles Apply to Commercial Auto Insurance?
Deductibles in a commercial auto policy apply to physical damages. You can choose what level of deductible for each. Generally, the higher the deductible, the lower your annual premium.
A deductible applies if you file a claim for your vehicle. For example, if you’re in an accident with another car for which you’re not at fault and have collision or upset coverage, there’s usually a minimum deductible of $500 that you must pay before your insurance provider pays the balance of your claim up to the coverage limit.
Tip: Choose a deductible your business could comfortably afford to pay without disrupting day-to-day operations or cash flow.
Frequently Asked Questions About Hired and Non-Owned Commercial Auto Insurance in Canada
Do I need hired and non-owned commercial auto insurance if I don’t own any vehicles?
Yes, you may still need it. If your business rents vehicles or if employees use their personal cars for work-related tasks, hired and non-owned commercial auto insurance can help protect your business from liability claims, even if you don’t own a single vehicle.
Does hired and non-owned commercial auto insurance cover damage to the vehicle itself?
Hired commercial auto insurance covers physical damages to vehicles. Non-owned commercial auto insurance covers liability claims, not physical damage to the rented or employee-owned vehicle. However, you can add a legal liability endorsement to a non-owned commercial auto policy to cover physical damages.
Is hired and non-owned commercial auto insurance required by law in Canada?
No, it’s not legally required—but it is strongly recommended. While commercial auto insurance is mandatory for owned vehicles, hired and non-owned coverage is optional. However, it can be critical for protecting your business from lawsuits and out-of-pocket costs when vehicles you don’t own are used for work.
How much does hired and non-owned commercial auto insurance cost in Canada?
The cost is usually relatively low compared to owning and insuring vehicles. Pricing depends on factors such as how often vehicles are used, the type of business, and risk exposure. But for many small businesses, it’s an affordable way to reduce significant liability risk.
How to Get Commercial Auto Insurance for Your Business in Canada
Whether you own commercial vehicles, rent them occasionally, or rely on employees’ cars, commercial auto insurance helps protect your business from costly accidents, lawsuits, and unexpected downtime.
Zensurance helps Canadian business owners compare commercial auto coverage options, understand hired and non-owned auto insurance, and get insured quickly entirely online.
Complete our online application to receive a free commercial auto insurance quote in just a few minutes.
With access to over 50 insurers, our licensed brokers help you find the right protection at a price that makes sense for your business.
– Updated February 18, 2026.
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