Insurance Guide: Getting the Right Coverage for Your Auto Business

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Transport truck carrying new vehicles. Photo Adobe Stock

From repair technicians and aftermarket suppliers to car dealership owners, automotive industry professionals have many liability risks they must address. Here’s how business insurance can help.

Automotive professionals – from repair technicians to auto dealership owners – may face a bumpy road ahead. The sharing economy, the advent of connected cars, and a tumultuous economy are all fuelling disruption industrywide. However, one thing that hasn’t changed is the liability risks they face.

Whether it’s a dealership transporting people, equipment, or materials using company vehicles, an employee of an auto parts supplier using their car for business purposes, or a mechanic test-driving a customer’s SUV after repairing it, your business needs a commercial auto insurance policy. There may be some confusion as to why. For instance, why wouldn’t your personal or private-passenger car insurance cover you if you use your vehicle for work reasons?

Using your vehicle to commute to a workplace is one thing. Your personal car insurance policy covers you for that if you get into an accident. But using it to perform your job is another matter entirely. Insurance companies consider people driving business or private vehicles for work purposes a higher risk than private-passenger drivers. Using any vehicle for business means you’re on the road more often, driving long distances, usually during peak traffic times and on major highways.

That rule-of-thumb isn’t limited to automotive professionals. It applies to anyone using a vehicle to do their jobs, even folks who deliver goods or food as an occasional or part-time side hustle. If you use your vehicle periodically for work purposes, your personal car insurance carrier may accommodate you by revising your existing policy, but it depends on the insurer. Some will, but some won’t.

It helps to understand what factors insurers consider when assessing a driver’s risk for a commercial auto policy. They include:

  • The type of vehicle and who owns it
  • Your driving record
  • How many kilometres you drive annually
  • Where you are located
  • The line of work you’re in or how you use the vehicle for business

It’s essential to know that a personal car insurance policy won’t cover you for collisions, damages, or lawsuits related to using your vehicle for work regularly, such as making deliveries or picking up car parts for your repair shop.

Getting Coverage for A Fleet of Business Vehicles

Suppose your small business has a fleet of five vans that several employees use. If so, fleet insurance is a more cost-effective way to protect them since an insurance company will provide you with a group rate that may come with a modest discount for insuring more than one vehicle with them, especially if the vehicle models are similar and used for the same purposes.

A commercial fleet insurance policy provides similar coverages to a single commercial auto or personal car insurance policy. Typically, a standard commercial auto or fleet insurance policy includes coverage for:

  • Third-party liability. If you are at fault for an accident that causes bodily injury to another person or damage to a vehicle, third-party liability provides the financial support to pay for those damages. It also includes coverage for your legal expenses if you are sued.
  • Accident benefits. Accident benefits pay for your medical fees and rehabilitation or funeral expenses if you are hurt or killed in a collision.
  • Uninsured auto. If you or one of your employees is injured or killed or your vehicle is damaged in a hit-and-run incident in your home province, this type of coverage pays for those costs.
  • Direct compensation-property damage (DCPD). Some provinces may not require insurers to include DCPD in a basic policy, but many do. In essence, DCPD allows you to deal directly with your insurance company to cover damages as quickly as possible to your vehicle or if you’re injured in a collision you did not cause.

There are optional coverages you can include in your policy. The most common (and recommended) are:

  • Collision or upset coverage. Collision coverage pays to repair or replace your vehicle if you’re in an accident with another car or a stationary object. You must pay a deductible before your coverage kicks in, but you can choose how much the deductible is. Without collision insurance, you’re on your own to repair or replace your vehicle.
  • Comprehensive coverage. Don’t be fooled by the name. Comprehensive coverage does not mean you’re covered for everything under the sun. This type of insurance provides financial support to repair or replace your vehicle if it’s damaged or destroyed by extreme weather, a natural disaster, fire or explosions, falling objects, theft, vandalism, or a collision with an animal that unexpectedly darts out in front of you. It, too, is subject to a deductible.
  • All-perils or all-risk coverage. Think of all-perils coverage as the best of both worlds. It’s a combination of collision and comprehensive insurance, and as the name suggests, it covers you for all the perils you may face in either category. It also includes coverage for vehicles damaged or stolen by an employee. That’s critical for automotive businesses with employees who are all occasional drivers.

How Does Insurance Protect Automotive Businesses?

Auto repair shops, garage owners, car dealerships, and other similar automotive businesses require a different kind of policy known as garage insurance.

Think of garage liability insurance as an umbrella policy containing several coverages that protect the vehicles in your care, custody, and control whether you own them or not. A policy like this will include standard business coverages such as commercial property and general liability insurance. It also protects vehicles in your garage or on your lot.

For example, if you run an auto repair shop, garage insurance covers vehicles under repair or being test-driven by an employee. Additionally, it protects you if vehicles in your lot are stolen or vandalized. A garage insurance policy also includes garage tool coverage to replace or repair lost or damaged equipment, tools, or others’ property in your care.

Getting a commercial auto, fleet insurance, or garage liability policy doesn’t need to be a frustrating or confusing affair. Speak to a licensed business insurance broker about your options to get the peace of mind and coverage you need at an affordable rate.

About the Author

Joe Sarraino is a licensed insurance broker and Team Lead, Contractors, at Zensurance, Canada’s leading digital business insurance brokerage.

Sponsored content by Zensurance.


Categories : Commercial, Dealerships
Tags : Insurance


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