Not only is it required by law nationwide to insure any vehicle regardless of its use, but for business owners, it’s highly recommended to buy commercial auto insurance to protect the business vehicles you own, as most private-passenger car insurance policies do not cover incidents or accidents involving a vehicle used for business purposes. 

However, if your company has five or more business vehicles, getting a commercial fleet vehicle insurance policy to cover them is more economical than buying individual policies for each set of wheels.

But what if your small business owns no vehicles, and you must hire, rent, or lease one? Or, what if you rely on your employees to use their cars for work, such as making deliveries or shuttling raw materials and people from one location to another?

Why business owners need commercial auto insurance.

Download Our FREE Insurance Whitepaper

Learn everything you need to protect your small business.

Your email address will be used by Zensurance to provide latest news, offers and tips. You can unsubscribe at any time.

Zensurance - Small Business Insurance Guide
Save on business insurance - CTA

Related Posts

Sign Up for ZenMail

The best of Zensurance news, tips, and resources are delivered straight to your inbox.


In either scenario, you should add optional coverages to your commercial auto policy to protect your finances if these vehicles are damaged or involved in a car 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.

What Is Hired Commercial Auto Insurance?

Hired commercial auto insurance covers vehicles you hire, rent, or lease for your business, including cars, pickups, vans, SUVs, and trailers. It is an optional type of coverage you can include in a basic or mandatory business vehicle policy.

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 is designed for businesses that don’t own any vehicles but might have employees using their cars for work-related tasks, like making deliveries or visiting clients. Commercial non-owned coverage is also an optional type of protection you can add to a business vehicle policy.

Non-owned commercial auto insurance provides coverage if an employee gets into an accident while using their car or other type of vehicle for work.

However, be aware both hired and non-owned commercial auto insurance does not apply if an accident occurs with either a rented vehicle or an employee’s vehicle while commuting to and from work or if used to run personal errands.

What’s In a Basic or Mandatory Commercial Auto Insurance Policy?

Like private-passenger car insurance you purchase to protect a family vehicle, commercial auto insurance includes mandatory or basic coverages and limits set by each province’s ministry of transportation. Though the coverage limits and terminologies may vary by province, the mandatory or basic coverages are:

  • Third-party liability covers you if you’re at-fault for an accident that causes property damage, bodily injury, or the death of another person. Most provinces require a minimum of $200,000 in third-party liability to cover a single accident. Increasing that amount is recommended since the costs can easily exceed the minimum, especially if you are taken to court.
  • Accident benefits cover your medical rehabilitation expenses if you or your passengers are injured in an accident, whether or not you’re at fault for a collision. The minimum coverage limit required by law is usually $65,000 for non-catastrophic injuries and $1 million for catastrophic injuries. In most provinces, you can increase the coverage limit for non-catastrophic injuries to $130,000.
  • Uninsured auto covers damages to your vehicle and medical expenses if you’re injured or killed following a collision with an uninsured motorist who’s at fault for the crash or in a hit-and-run accident. It also covers vehicle damages caused by an unidentified driver who’s not insured. 
  • Direct compensation-property damage (DCPD) pays for damages to your vehicle and its contents and the loss of use of your wheels if another motorist is at fault for a collision. DCPD allows you to collect funds directly from your insurance provider. 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?

The most common optional coverages you can add to your commercial auto policy to enhance your protection include:

  • Collision or upset coverage pays for damages to your vehicle if you are not at fault for an accident with another car or trailer. It also covers damages to your car or truck if damaged by the surface of the ground like a pothole, 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 Factor Into Commercial Auto Insurance?

Deductibles typically apply to all coverages within a commercial auto policy. 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, suppose you’re in an accident with another car for which you’re not at fault and have collision or upset coverage in your policy. In that case, 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

How to Get Low-Cost Commercial Auto Insurance Quickly

Not only is protecting your wheels with commercial auto insurance a legal requirement in Canada, but it’s also a wise investment to shelter your small business or profession from expensive damage and loss.

Fill out our online application for a free commercial auto insurance quote, and explore your options. Our experienced brokers will shop our partner network of over 50 insurance providers to get the low-cost coverage you need and customize it to suit your business.

Related Posts

Share This Story:

About the Author: Brandon Bowie

Brandon Bowie is a Team Lead, Professional Lines at Zensurance.