Do I need commercial auto insurance for small Businesses?

Do I need commercial auto insurance for small Businesses?

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Commercial Auto Insurance


Auto insurance is mandatory in most regions of Canada. But having an insurance policy doesn’t necessarily mean you have the right coverage. For instance, if you use your vehicle for business purposes, you may be required to purchase commercial auto insurance.

Having appropriate insurance coverage is important to protect all of your assets—among them, your vehicle.  It’s important to understand what type of policy covers to ensure you’re not leaving yourself vulnerable to a potential loss.

Factors to consider for auto insurance

Three main factors determine if you should consider purchasing insurance:

1. Use of the vehicle

This is the most important factor. Commercial vehicles generally serve specific purposes, like transporting people, merchandise or tools, and are therefore exposed to different types of risk than personal vehicles. If your commercial use is only occasional and doesn’t involve deliveries, insurance may not be necessary. Conversely, if you make daily trips to visit clients, transport merchandise or make deliveries, then it’s probably best to have it.

2. Type of vehicle

Some vehicles, such as tool vehicles and heavy trucks, cost more to repair or replace, and can cause extensive damage in case of an accident. Commercial auto insurance is therefore necessary.

3. Vehicle owner

If you’re the sole owner of the vehicle, personal auto insurance may be enough. However, if the vehicle belongs to a business or to your employer, commercial insurance is probably required. There are some exceptions, but this is generally a good rule to follow.

Why Small Businesses Need Commercial Auto Insurance?

Commercial auto coverage is designed to protect businesses of all sizes from litigation related to automotive incidents. Whether the incident is an auto collision, an unloading accident, or a new work truck stolen from the parking lot, commercial auto insurance is there to help pick up the pieces. But why do small businesses, in particular, need commercial auto insurance?

Small businesses have a ton of expenses. Employing workers with fair wages, excellent benefits, and stability is expensive. But making sure that your workers and equipment are protected financially and medically is a no-brainer.

Commercial auto insurance is an affordable monthly expense that ensures your business is covered in the event that you’re sued by an uninsured motorist or jaywalking citizen. It helps ensure that your business can keep showing up at a job site after a vandal breaks an expensive piece of covered equipment. And it helps ensure that your employees’ medical expenses are taken care of after a work truck is T-boned crossing an intersection.

While nobody wants to experience any of these incidents, the truth is that the future can be unpredictable. Even the most careful among us get into an accident every now and then. But protecting the business by minimizing the risk with a insurance policy is an affordable and cost-effective way to keep employees at work, vehicles on the job, and jobs on schedule.