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A commercial motor vehicle is a vehicle used for the purpose of business, for the transportation of persons or goods, according to the Motor Vehicle Act in Canada.
A commercial motor vehicle could be:
Commercial auto insurance provides protection for vehicles that are used for business purposes. For example, businesses within the construction, retail, and restaurant industries require commercial car insurance.
Commercial vehicle insurance is designed to protect company-owned vehicles to ensure that business owners are not vulnerable to costly risks and losses in case things go awry. Business auto insurance covers medical expenses, lost wages, and replacement vehicle costs.
In Canada, automobile insurance is mandatory across all provinces and territories, but requirements for mandatory coverage may vary by province. Mandatory automobile coverage typically includes third-party liability, accident benefits and physical damage coverage. Additional auto insurance coverages such as collision, specified perils, comprehensive and all perils coverages are available as optional add-ons.
If you use a privately-owned vehicle for commercial purposes, you will need to apply for IRCA (individually-rated commercial auto insurance). IRCA eligible vehicles are non-fleet automobiles used for commercial purposes rather than personal use. They are rated based on the driver’s driving record and claims history.
Auto insurance is mandatory in Canada for all vehicles. The primary determinant for requiring commercial auto insurance is the intended use of your vehicle.
Whether you drive a luxury vehicle, a pickup truck, or a small fleet of branded company vans, you need a commercial auto policy if you use the vehicle for:
If your job requires you to drive on a regular basis, you may need commercial auto insurance. This does not include your daily commute, which is covered by your personal policy.
Here's what distinguishes a personal vehicle from a commercial one:
Sometimes the distinction between personal and commercial use is less obvious:
If you’re ever not sure if your vehicle usage counts as commercial use, ask your insurance provider.
In Canada, the mandatory or minimum amount of policy coverage required by law for a vehicle owner to purchase varies in each province and territory. These mandatory premium requirements may change depending on which province you purchase your vehicle and for what purpose. No matter where you live in Canada, driving a vehicle without insurance is a serious offence. If you are caught driving without insurance, you will likely be considered a "high risk" driver by insurance providers and may be charged a higher premium.
Before purchasing a licence plate, renewing your vehicle registration, or buying a temporary permit, you need to purchase car insurance.
| Insurance type | Mandatory coverage | Optional/Additional coverage |
|---|---|---|
| Third-Party Liability | $200,000 minimum. Provides coverage in the event of a lawsuit resulting from an accident where you are at fault. | Coverage can be increased to $500,000, $1 million, or $2 million, with up to $2 million limit. |
| Uninsured Automobile Insurance | Provides up to $200,000 in coverage if you are injured or killed by an uninsured driver, or if your vehicle is damaged as a result of a hit-and-run by an unidentified, uninsured motorist. | Family Protection Coverage is an optional coverage that includes additional coverage of up to $1 million in the case of a hit-and-run by an uninsured motorist. |
| Statutory Accident Benefits | Provides coverage if you are injured in an accident, regardless of who is at fault. Covers medical expenses that aren’t covered by OHIP. | Coverage limits can be increased. |
| Collision Coverage (Also Upset Coverage) | Optional | Covers the costs of repairing or replacing your vehicle following a collision with another vehicle, an object, or property. |
| Comprehensive Coverage | Optional | Covers damages caused by named perils identified under the Specified Perils coverage, as well as losses from other perils like falling or flying objects, theft, fire, hail, windstorms, missiles, and vandalism. |
| Specified Perils Coverage | Optional | Covers damages caused by named perils such as theft, attempted theft, explosions, natural disasters like fire, lightning, windstorm, hail, rising water, earthquakes, and also other perils specified in your policy. Specified perils do not cover damages due to vandalism, breakage of glass, etc. |
| Direct Compensation-Property Damage (DC-PD) | Optional | DCPD is a standard coverage, but drivers in Ontario can opt to remove it. It covers damage to your car, or loss of use of your vehicle, if someone else is at fault. It must have involved another insured vehicle. Removing DCPD coverage disqualifies you from these benefits and you cannot sue for vehicle damage, either. |
| All-Perils Coverage | Optional | Combines collision/upset and comprehensive coverage. Also provides additional protection if a household member or an employee steals your vehicle. |
| OPCF 20: Coverage for Transportation Replacement | Optional | Covers the cost of your transportation replacement and rental car insurance if you were to get into a car accident or if your vehicle is stolen. |
| OPCF 27: Liability for Damage to Non-Owned Automobile(s) | Optional | Covers if you damage a borrowed or rental vehicle. The coverage limit is usually around $25,000 to $50,000. |
| OPCF 39: Accident Waiver/Forgiveness | Optional | Protect your premium from rising when you have your first at-fault accident. |
| OPCF 43: Waiver of Depreciation | Optional | Protects you by removing your insurer's right to deduct depreciation from the value of your vehicle when settling a claim. This coverage is for new vehicles with fewer than 5,000 kilometres. |
| OPCF 44R: Family Protection Coverage | Optional | Protects you if you or a family member is injured, regardless of whether you or your family members are in the car when the accident occurs |
| OPCF 49: Agreement Not to Recover for Loss or Damage from an Automobile Collision | Optional | Removes DCPD coverage from your insurance policy. |
The cost of commercial auto insurance in Ontario can vary depending on the type of vehicle, business, and usage of the vehicle.
Commercial auto insurance premiums can be thousands of dollars annually per vehicle, varying based on risk exposure, coverage requirements, and the repair or replacement costs of the specific vehicle model.
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A commercial auto insurance policy has some similarities to a personal insurance policy, but they are different products.
In Ontario, both commercial and personal auto insurance require that coverage include accident benefits coverage, third-party liability coverage, and uninsured automobile coverage. Most importantly, commercial use of a vehicle is specifically excluded from a personal policy.
With commercial insurance, additional coverages are available to cover specialist equipment (e.g. an aerial ladder on a fire truck), or industry-specific usage. Some popular commercial add-ons include coverage for trailers attached to your vehicle, and loading/unloading liability for delivery vehicles.
Since commercial vehicle use comes with additional risk, it requires a policy that offers more robust coverage than a personal car insurance policy.
Commercial auto insurance costs more than personal auto insurance due to higher coverage limits. Personal policies cover one driver, while commercial policies cover multiple drivers and vehicles, including those with poor driving records.
Premiums depend on a range of factors, such as:
Small businesses with fewer vehicles and drivers typically pay less than businesses with large fleets.
It will depend on the specific circumstances, but if you get into an accident while driving for business, and this use isn’t specifically covered by your policy, the insurer could deny your claim.
This means you would have to pay out-of-pocket for repairs and other costs. On top of this, your policy could be cancelled for failing to notify the insurer of your vehicle’s intended use. You’ll face higher premiums on your next policy as a result.
In most cases, yes. If you have permission from the owner, you can use a commercial vehicle for personal use and the commercial insurance will cover you in the event of an accident. However, if your commercial vehicle is larger than a pick-up truck, it would probably be easier, and cheaper, to use a normal car for personal errands.
It is impossible to say which company has the best commercial insurance without first understanding the coverage your business requires. To get a better idea of how much it might cost to insure your commercial vehicle, complete our free online quoter to see multiple rates in one place. With this information, you can make an informed decision about which company is best for your business. We understand that your business is your livelihood, and you can trust RATESDOTCA to help you find a great deal.
If you drive for Uber, Lyft or any other rideshare company, check with your insurance company to see if you need additional coverage. Some rideshare companies have partnered with Canadian insurers to provide blanket coverage for all drivers on their platform.
In Ontario, Quebec and Alberta, Uber has an agreement with Economical Insurance. From the moment you log into the app, to the moment the passenger leaves your vehicle, this commercial policy takes precedence over your personal coverage. The commercial premiums are paid for by Uber, and not charged to individual drivers.
It’s possible that your personal car insurance policy will increase if you are a rideshare driver. The additional usage will lead to more wear and tear on your car, and more time on the road increases your chances of getting into a collision.
When you run a business, saving every dollar counts. The cost of your commercial auto policy is determined by multiple factors. Some of them are more or less out of your control, like the location of your business, but there are steps that you can take to keep your costs down:
If you work for a ride share company like Uber and Lyft, they have insurance policies to cover ride share drivers, but the same may not apply for drivers who deliver fast food or take out for apps like UberEats and DoorDash. Learn more about commercial car insurance for food delivery drivers.
Shivani is a Content Manager at RATESDOTCA, focusing on mortgages. She is an experienced communication and marketing professional who specializes in content strategy and SEO optimization. Shivani ensures that our written materials meet the highest standards of quality and relevance.
She holds a Digital Marketing Management certificate from the University of Toronto, a Business Communications certificate from the University of British Columbia, a Master’s degree in Mass Communication from Symbiosis Institute of Media and Communications and a Bachelor's degree in English from the University of Delhi.
Shivani has previously worked as a deputy digital productions editor with PMNA-The Canadian Press, and as an editor with The Globe and Mail, Toronto Star, and the Investor's Digest of Canada. She has also worked in reputed news media groups in India and the Middle East.
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