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The Difference Between Commercial Auto Insurance and Personal Auto Insurance

Jul 9 2021

If you are a business owner or independent contractor who already has personal auto insurance, you may be wondering if commercial auto insurance is any different.
The rule of thumb is that any vehicle used for commercial purposes needs commercial insurance.

So what does your business need?

In this article, we will discuss the difference between personal auto insurance and commercial auto insurance. Let’s get started!

Hired Non-Owned Auto (HNOA) Insurance 

First, let’s touch on Hired Non-Owned Auto Insurance, which is related to both auto insurance types.

HNOA insurance is for vehicles that your business doesn’t own but uses regularly. This type of insurance will protect you in the event of road accidents and other unforeseen circumstances.

HNOA Insurance will fit your needs the best if…

  • You or your employees do business-related errands while driving personal vehicles.
  • You rent or lease vehicles for any business-related purposes.

If you think that this is the type of insurance for you and would like to know more, KASE Insurance can help you. We’d be more than happy to help you get started!

A clipboard with a form for car insurance

Personal Auto Insurance vs Commercial Auto Insurance 

1. Coverage For Business Use 

Personal auto insurance is specifically designed to protect you, your family, and your personally owned vehicle. A comprehensive policy can include coverage for medical fees and repair fees associated with road accidents and malicious acts like theft and vandalism.

However, personal auto insurance policies will generally exclude road accidents when the vehicle is used for business. Therefore, if you get into a collision while doing a business task (e.g. delivery or meeting clients), your claim will likely be rejected.

Meanwhile, commercial auto insurance will specifically cover you for road accidents that occur while you’re performing day-to-day business operations with your company-owned vehicle. This type of insurance will provide coverage for bodily injuries, property damage, and damage to your vehicle. Theft, vandalism, and other perils (e.g. fire, hail, or falling debris) are typically covered in a comprehensive commercial auto insurance plan.

2. Having The Employees As Additional Insured

For personal auto insurance policies, the insured driver and passengers only include yourself as the policyholder and two immediate family members. Employees are not included in this type of insurance. Therefore, if you ask your employee to use your personal vehicle for a business-related task, any claims for road accidents will likely be declined.

On the contrary, a commercial auto insurance policy will include all your employees as additional insureds. An additional insured refers to coverage for anyone, aside from the policyholder. What this means is that by having commercial auto insurance, any one of your employees can safely use any insured company-owned vehicle.

Furthermore, commercial auto insurance can be extended to protect the drivers and passengers if they sustain bodily injury in a road accident. The policy will give payouts for medical fees even if the road accident is the driver’s fault.

3. The Type of Vehicle That Can Be Insured 

As we’ve touched on earlier, personal auto insurance will only cover personal vehicles. This means that some vehicles cannot be granted personal auto insurance. A few examples include lorries, emergency vehicles, refrigerated trucks, and other HGVs or LGVs.

Meanwhile, commercial auto insurance can be secured for vehicles used for the following:

  • Car rentals or vehicles for hire
  • Delivering goods
  • Transportation of materials, tools, equipment, and etc.
  • Transportation of employees and contractors

Whether you are using a car, SUV, pickup truck, delivery truck, minibus, bus, or any type of HGV for the above purposes, commercial auto insurance has your back.

A delivery van with the backdoor open to show boxes inside

4. Coverage Limits 

Commercial auto insurance plans generally offer a higher coverage limit than personal auto insurance plans.

Under FSCO rules, drivers in Ontario are required to carry personal auto insurance, with at least a third-party liability coverage amounting to $200,000. However, some companies prefer to have a higher coverage up to around $500,000, which is the minimum coverage limit for commercial auto insurance. You have the option to increase the amount depending on what your business needs.

5. Premium Costs 

In insurance, the higher the coverage limit, the higher the premium tends to be. On average, the monthly cost of personal auto insurance in Ontario is around $125 per month and about $150 per month for commercial auto insurance.

Get Insured By Expert Award-Winning Insurance Brokers

Not all commercial auto insurance plans or HNOA insurance plans are the same. If you need any of these for your business, you can count on KASE Insurance to put together a customized commercial insurance plan that truly fits your needs.

We are an award-winning commercial insurance brokerage firm based in Toronto. Over the years, we have served numerous businesses from different industries. Our expert team is here to help with all your commercial insurance needs. With KASE Insurance, you can be sure that you are in good hands.

Contact KASE Insurance today!


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