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April 1, 2024

When you are running your own business, you may occasionally use your own personal vehicle to do some work for the business but should you? If you are going to use your vehicle for business reasons, you will need to ensure that your vehicle – and anyone driving it – is properly insured for business purposes. Here’s what you need to know about insuring a car for business purposes.  

What is the difference between personal and commercial insurance?  

In Canada, any driver who owns a car is legally required to have proper insurance on their vehicle. This is known as personal auto insurance, and it covers drivers for their everyday personal driving activities like commuting to work, picking up groceries, running errands and so on.  

Commercial insurance is what is needed when you own a business that requires use of a vehicle to perform the daily activities of the business. This type of auto insurance is designed to fit the needs of the business, instead of your personal needs. Certain items like liability and replacement may be different on a commercial policy because the requirements of the insured are different – you can’t lose out on your business if the vehicle is written off or in the shop.  

Can you ever use your own vehicle for business purposes?  

The good news is that there are some circumstances where personal vehicles would be allowed to be used for business purposes.  

These situations include visiting clients, making bank deposits or company errands. Additionally, if your business is a delivery business – like a restaurant – then often a personal vehicle can be used for delivery of the food you’re providing. Further, personal vehicles can be used for ride share companies, like Uber.  

Should I buy a separate car for my small business? 

When you are just starting out with your business, being mindful of costs is really important. Buying a car for your business would be a big expense that should be considered carefully as it’s not just the cost of the car – there are also expenses like vehicle registration, licensing, insurance, gas and any financing costs that need to be paid as part of having this vehicle.  

You will also need to consult with your accountant about writing off the costs of the vehicle, and how that may benefit your company.  

Do you really need commercial auto insurance? 

If you find that you are often using your personal vehicle for business uses, then it might be time to look at getting a commercial policy – or at least some additional coverage. 

If something happened while driving and it was for business purpose, you wouldn’t want to lose out on that coverage and possibly have to pay for a repair out of pocket.  

When the lines between personal and business are crossing, it may be worth it to look into what a commercial policy would cost you and if it’s worth it for you. Take care of your business, your employees and your own car by ensuring you have the right insurance policy.  

Contact ICD Insurance today 

Do you have questions about commercial auto insurance and whether you need it for your vehicle? Call ICD Insurance today to speak to a broker.