According to the Insurance Bureau of Canada, commercial auto insurance can be defined as:

An auto insurance policy designed to protect a business in the event of accident, theft, injury and/or other damages involving business vehicles and business staff while driving those insured company vehicles, or their own vehicles or rented vehicles for business purposes. There are a variety of coverages for commercial autos, depending on the business being operated and who owns the vehicles being used.

Sure it's a dry, stuffy way to explain commercial auto insurance, but it's accurate, succinct and to the point. It's also insurance after all so it's to be expected.

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Commercial auto insurance and the law

As a business owner, you need the same kinds of insurance coverages for the car, truck or trailer that you use in your business as you do for a car used for personal travel. The fact is, regardless of where you may be driving in Canada, if you plan to drive a vehicle on public roads the vehicle must be covered under an insurance policy with certain minimum compulsory coverages. It is the law in all provinces and territories.

What is a commercial vehicle?

Ready for another dry definition? Here it goes. A commercial vehicle is a motor vehicle used primarily to transport materials, goods, tools or equipment that related to your occupation. It also includes a trailer that is intended for use with said commercial vehicle.

Common commercial auto insurance coverages

A commercial auto insurance policy typically includes the same mandatory coverages and offers the same optional coverages as the auto insurance policy you have for your private, personal-use vehicle.

While it will vary by province, the following is a list of the most common mandatory and optional commercial auto insurance coverages that may be included in your commercial auto insurance policy:
  • Accident Benefits coverage
    Accident Benefits coverage is compulsory almost everywhere in Canada. It varies by province but in general provides compensation for medical and rehabilitation treatments, funeral expenses, loss of income due to disability and death.
  • Third-party Liability Coverage
    Third-party liability (known as Civil Liability in Quebec) provides coverage if while driving your company's vehicle, the driver is held legally liable for injures to someone else, or for damages to another's property. If the driver is held liable for more than the coverage, your company may be responsible for the balance. Third-party liability coverage is compulsory in all provinces and territories, although the minimum amount of coverage needed may vary.
  • Uninsured, Underinsured or Unidentified Motorist coverage
    This coverage is universal across Canada. While it may be called something different, or split into two or more coverage types the principles are the same. Uninsured, underinsured or unidentified motorist coverage provides payment (the amounts vary among the provinces) if the person driving your company vehicle is injured or killed through the fault of an uninsured/underinsured driver, or by an unidentified vehicle like in a hit-and-run.
  • Direct Compensation- Property Damage
    In Ontario, Quebec and New Brunswick, Direct Compensation - Property Damage coverage provides for damage to your vehicle and any property inside permanently attached, because of an automobile accident where your company vehicle's driver is not-at-fault or partially not-at-fault.
  • Collision coverage
    Collision is an optional coverage that is the part of your policy that protects your vehicle if it is damaged in an accident.

    There is usually a deductible.
  • Comprehensive coverage
    Comprehensive coverage, like Collision, is optional. It protects your vehicle against loss or damage resulting from something other than a collision. Comprehensive coverage usually applies in the case of loss or damage from falling or flying objects, theft and vandalism.

    There is usually a deductible.
  • Family Protection coverage
    Family Protection provides coverage for the vehicle's driver from the actions of an at-fault, uninsured or underinsured driver. If available, Family Protection ensures coverage up to your commercial auto insurance policy's limits regardless of the other person's coverage levels.
Commercial auto insurance policies may include optional coverages that you might not typically see with your personal-use car insurance policy. The reason for this is that some business vehicles may have unique, specialized needs that pertain specifically to machinery or equipment that is part of the vehicle, trailer or both.

Get commercial auto insurance quotes

Well now you know the basics of commercial auto insurance, but remember to always speak to a licensed commercial auto insurance representative if you ever need clarification, more information or are wondering if it's a commercial auto insurance policy you really need.

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