Commercial auto versus personal auto insurance

Heavy traffic  on the highway

If you’re a business owner who manages different commercial automobiles, it’s a good idea to get Commercial Auto Insurance in addition to your Personal Auto Insurance. While both types of policies work the same way, they are different and encompass separate categories of vehicles. With that being said, personal use vehicles (if registered in the company name or owner of the company) can still be covered under an Individually Rated Commercial Auto (IRCA) or Fleet policy, if preferred. In this article, we’ll break down the difference between Commercial Auto Insurance and Personal Auto Insurance.

What is Commercial Auto Insurance?

Commercial Auto Insurance is an insurance policy that covers all types of vehicles used in conjunction with a business’s operations. It encompasses everything from heavy transport trucks to company sales cars.

It's good to know the difference between Commercial Auto and Business Auto in this regard, but generally, both require Commercial Auto Insurance. As long as it’s an automobile used for commercial purposes (in some cases, even if it’s a recreational vehicle) and registered under a company, you’ll need to get a Commercial Auto Insurance Quote for it. The same is true if an aspect of your job requires you to drive regularly.

What is Personal Auto Insurance?

Personal Auto Insurance is an insurance policy that’s mandatory in Canada and covers all personal-use vehicles of an insured individual. This refers to all cars that you might use for daily commutes or for pleasure driving, and maybe occasional business use. 

Which Auto Insurance do I need: Commercial or Personal?

Both Commercial Auto Insurance and Personal Auto Insurance are designed to protect you from incurring the cost of damages caused by your vehicles on the road, regardless of if it’s your fault or not (in most cases). But how do you know which one applies to your automobile?

If you own a car in your name and are driving it every day, such as for going to work or running errands, you likely only need Personal Auto Insurance. But if you’re a business owner that operates one or more vehicles for business purposes (for reasons that coincide with your business operations such as transport or delivery), you’ll need Commercial Auto Insurance. 

Is it okay to have both Commercial and Personal Auto Insurance?

If you’re an owner of a personal-use vehicle and a businessperson with a company that operates commercial vehicles, it’s mandatory to have both Commercial and Personal Auto Insurance policies.

Both types of insurance plans work similarly, but business and commercial-use automobiles aren’t included in standard personal use policies, which is why you’ll need a separate plan.

Types of Commercial Auto Insurance

Generally, there are three types of Commercial Auto Insurance available. It’s a good idea to understand each of them so you can choose the right one for your business.

Individually Rated Commercial Auto (ICRA) Insurance

IRCA Insurance works by rating each commercial vehicle in a business individually. This is ideal for companies that don’t operate a large collection of automobiles.

Fleet Insurance

Fleet Insurance is a type of Commercial Auto Insurance policy that’s designed to cover a fleet of multiple vehicles. It assesses these cars as a group (instead of individually), so pricing is more competitive.

Garage Insurance

Garage Insurance is primarily designed for garage owners and auto dealers. It provides protection for vehicles that are in the care, custody, and control of the insured. 

What is covered by Commercial Auto Insurance?

Commercial Auto Insurance typically comes with two required coverages:

  • Third-Party Liability: Protects your business, including employees, should you or anyone related to the company driving an insured vehicle cause damage to another vehicle or injure a person
  • Accident Benefits*: Covers medical and rehabilitation bills of anyone injured during an accident involving an insured vehicle

You can also extend your policy with additional coverage options such as Collision, Upset, Comprehensive, Direct Compensation Property Damage or All Perils coverage. These extras could be based on the possible commercial auto claims examples that you anticipate you might file in the future based on the nature of your operations.

Commercial Auto Insurance for business vehicles

Auto Insurance is mandatory in Canada as a way to keep the roads safe. For businesses that operate vehicles, you must have a Commercial Auto Insurance policy. Talk to your insurance broker today to find the perfect policy for you.

*Does not apply in Quebec

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