Am I covered if I use my personal vehicle for work?

12 minute read Published on Jun 13, 2023 by BrokerLink Communications

A woman in formal wear using her phone while getting out of her car

Personal car insurance is a type of mandatory insurance for all drivers in Canada. It can cover you in a wide range of circumstances. However, it typically doesn’t cover business use. Therefore, if you want to use your personal vehicle for work, you will likely need to purchase a commercial auto insurance policy. Read on to learn more about the differences between personal and business car insurance and how you can be covered in both circumstances.

What is personal car insurance?

Personal car insurance is a type of auto insurance policy designed to protect a policyholder’s personal vehicle. Specifically, it covers personal use of a vehicle, not business use, unless otherwise stipulated in your policy.

Personal car insurance coverage

Personal car insurance coverage varies between policyholders but it must meet the minimum coverage requirements in the province where you reside. For example, Ontario drivers must have policies that contain the four types of mandatory coverage: third party liability coverage, accident benefits coverage, direct compensation - property damage coverage, and uninsured automobile coverage. Any coverage they choose to include with their policies beyond that is optional, such as collision or comprehensive coverage. For a breakdown of some of the most popular types of personal car insurance coverages in Canada, keep reading:

Third party liability coverage

Third party liability coverage protects drivers from third party lawsuits that may be brought against them following an at-fault accident. In essence, if you cause a car accident and someone else involved in the accident sues you, your third party liability coverage would help pay for the legal costs needed to defend yourself in court and potentially settle the matter. Liability coverage in car insurance can also help pay for medical expenses, vehicle repair bills, and more. Ontario drivers are required to carry at least $200,000 worth of third party liability coverage with them at all times.

Accident benefits coverage

Accident benefits coverage, which is also mandatory, can pay for medical or healthcare costs incurred following a collision. This coverage can reimburse policyholders for any medical expenses not covered by the injured party’s health insurance, like prescription medications or rehabilitation. Please note that the policyholder doesn’t have to be the one who suffers an injury for accident benefits coverage to kick in. It can also cover medical expenses incurred by someone else injured in the accident, like a pedestrian, passenger, or the other motorist.

Direct compensation - property damage coverage

Direct compensation - property damage coverage is designed to compensate policyholders for any necessary property damage repairs following an accident. Whether your car is rear ended or your windshield is cracked in an accident, you might be able to seek compensation directly through your insurance provider via this mandatory coverage type.

Uninsured automobile coverage

Uninsured automobile coverage is also compulsory. It offers financial protection to policyholders who find themselves in an accident with an uninsured or underinsured driver. It can also protect those who are the victims of a hit and run and are dealing with an unidentified driver.

Collision coverage

Collision coverage is optional and is intended to help pay for the cost of repairs if a driver gets into an accident with a grounded object or another vehicle on the road, and their car is damaged in some way. Collision coverage can be claimed no matter if the policyholder caused the accident or another driver was responsible for it.

Comprehensive coverage

Comprehensive coverage is also optional and can protect vehicles from non-collision incidents, such as their vehicle being stolen or it being damaged in a fire while parked in their garage. The risks that comprehensive coverage protects against depend on the perils named in your policy. As the policyholder, you can decide which perils to include, with common ones being fire, wind, falling objects, water damage, theft, and vandalism. You can also choose all perils coverage, which offers the broadest possible protection.

Accident forgiveness coverage

One final type of optional car insurance coverage popular among drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Note: coverage varies by province.

What is commercial auto insurance?

Now that you understand more about personal auto insurance and what it covers, let’s dive into the world of commercial auto insurance. Commerical insurance coverage is a form of business insurance designed to protect cars used for business use. As mentioned, personal car insurance policies are designed to cover personal use only, so if you were to start using your personal vehicle for work, and an incident occurred, your insurance company could deny your claim. Thus, if you want to be protected at all times when using your vehicle, you will need to purchase a separate commercial auto insurance policy or add commercial auto insurance coverage to your existing personal car insurance policy.

Commercial auto insurance coverage is very similar to personal car insurance coverage, except it covers you when your vehicle is being used for business purposes. Business use of a vehicle ranges widely. It may include transporting materials to and from a job site, delivering orders from your warehouse to your customers, or even transiting staff between locations. Ultimately, insuring business vehicles is a key component of any effective risk management strategy.

Do I need commercial auto insurance?

Before purchasing a commercial auto insurance policy in addition to your personal car insurance policy, you will want to make sure that you actually need the extra coverage. If you aren’t sure whether you need business car insurance, look at the following criteria. If any apply to your situation, then chances are you need a commercial auto insurance policy:

  • You use your personal vehicle or other vehicles for work purposes, like making deliveries, visiting or transporting clients, or transporting materials or equipment.
  • You drive a large commercial vehicle that could cause greater damage than the typical passenger vehicle if an incident occurred. (Note that if your business has multiple vehicles for work purposes, fleet insurance may be required).
  • Your personal car is actually owned by a business and is mainly used for work purposes.

If you aren’t sure whether commercial car insurance is necessary or right for you, connect with BrokerLink to speak with a licenced commercial car insurance specialist today.


Do all business vehicles need commercial auto insurance?

Yes, any business that uses vehicles for work purposes, even if it’s an employee using their personal vehicle for work purposes, will need to purchase commercial auto insurance coverage. Examples of occupations that may be more likely to need business car insurance include:

Three types of commercial auto insurance policies

If you decide to buy a commercial auto insurance policy, you will need to decide which type of policy to buy. Most insurance companies offer the following three options:

Business use commercial auto insurance

Small businesses or home-based businesses may find business use commercial auto insurance to be the most worthwhile. This is applicable if you use your personal car to drive to various work locations, meet with clients, or deliver products. Business use commercial auto insurance coverage can be added to existing personal car insurance policies.

Business use and multiple drivers commercial auto insurance

Business use and multiple drivers insurance gives businesses the option of insuring multiple drivers. This is useful if more than one employee uses the vehicle for business purposes. In this case, the insurance coverage would still be purchased by the owner of the vehicle, whether that be the business or the employee whose car it is.

Commercial auto use only commercial auto insurance

Commercial auto use coverage is best suited for vehicles that are used exclusively for work purposes and those that are used frequently for such purposes. They are also intended for vehicles that have special equipment or other features relating to your business, such as a tool rack or snowplow.

The cost of commercial auto insurance

Purchasing commercial auto insurance, whether you decide to buy separate coverage or an add-on to your personal car insurance plan, costs money. You will either have to pay for a completely independent policy or budget for an increase in your personal car insurance premium. Since auto insurance is dependent on so many factors that are specific to the driver and the business, it can be difficult to provide an estimate as to how much it costs. However, we can share that, as with personal car insurance, commercial auto insurance rates are based on factors like the type of vehicle being driven, the driving records of all named drivers, the ages of the drivers, and the coverage types, limits, and deductibles you choose for your policy. A list of factors that determine commercial auto insurance rates include:

  • Your annual mileage
  • Who owns the vehicle - you or the business
  • Your driving record
  • Your location
  • The age of all drivers
  • The number of employees who need insurance
  • The make, model, and type of vehicle
  • The industry the business operates within

To receive an accurate and competitive commercial auto insurance quote, contact BrokerLink.


Personal car insurance vs. commercial auto insurance

You might be inclined to think that personal car insurance and commercial auto insurance are interchangeable since they share many of the same types of coverage. However, the reality is that they are not. Personal car insurance is for personal use of a vehicle and commercial auto insurance is for business use of a vehicle. One will not cover you for the other. Therefore, if you use your car for both personal and business purposes, you will either need to purchase two separate car insurance plans or add business car insurance as an endorsement on your personal car insurance policy. Failure to do so would mean that if you got into a car accident while using your personal vehicle for work purposes, your insurance company wouldn’t cover you.

Keep in mind that although using your personal vehicle for business use can make things confusing, there are major differences between personal and business use. Examples of using a car for personal use include driving to the grocery store, dropping your children off at school, or hitting the gym. Meanwhile, examples of using a car for business use include visiting clients, delivering online orders to customers, or transporting clients, tools or equipment. For example, a realtor who meets clients for showings or a social worker who visits several homes each day would likely both require commercial auto insurance.

Why personal car insurance may not cover business use

Now that you know how personal car insurance and commercial car insurance differ from one another, let’s provide some insight into why personal car insurance does not cover business use. Typically, insurance companies consider business drivers to be riskier than personal drivers, which is why separate coverage is required. This might be because business drivers tend to spend more time on the road than those who only use their cars for personal use. For example, if you are using a car for commercial purposes every day, you’re likely driving more than someone who only uses their vehicle to commute to work or runs errands.

How to save money on business auto insurance

Want to save money on commercial auto insurance? BrokerLink can help. Below is a list of tips to help you cut costs, whether you are purchasing a completely separate business car insurance plan or are simply adding a business car insurance endorsement to an existing policy:

Choose safe vehicles

The safer the vehicle you wish to insure, the lower your rates may be. Insurance companies like to assess risk, and when it comes to car insurance, one way they do this is by evaluating your vehicle. They will consider its safety rating, estimated value, and how frequently it is the victim of theft when calculating your premium. Therefore, choosing a safe, durable vehicle can reduce your rates. You can also quote vehicles prior to purchase if you wish to have an idea of premium costs.

Only insure qualified drivers with good driving records

If multiple people you work with all use a car for business purposes, you will need to insure each of them. Before naming them all in your policy, find out about their driving records and claims histories. If some employees have poor driving records and lots of insurance claims, it might be wise to insure an employee with a better driving record in place of them.

Ask about car insurance discounts you may be eligible for

Speak with an insurance broker about what car insurance discounts you may be eligible for. Qualifying for a discount can result in major savings. For example, if you drive a hybrid or electric vehicle or install snow tires on your car, you could save a lot.

Adopt safe driving habits

The safer you drive, the lower your rates will be. If you want to save money on personal or commercial car insurance, follow the rules of the road, drive responsibly, and limit the number of accidents or traffic violations you are involved in. Drivers with clean driving records will benefit from the cheapest car insurance rates of all.

Install an anti-theft device in your car

Take the extra step of installing an anti-theft device in your car to keep it safe and you could save money on car insurance. Both personal and commercial auto insurance providers are likely to offer discounts to policyholders who install security systems in their cars. Why? Such systems reduce the odds of theft, and therefore the odds of you needing to file a claim with your insurer.

Bundle policies

One final way to save money on car insurance of any kind is to bundle policies. Many insurance companies offer bundles to customers as a way of cutting costs. These bundles can be a mix of car insurance plans or a mix of various types of insurance, like business insurance and car insurance.

Call BrokerLink for more information on personal car insurance and business car insurance

If you still aren’t sure whether you can use your personal vehicle for work, contact BrokerLink now. A BrokerLink insurance advisor who knows the ins and outs of both car insurance and business insurance can help you understand in what circumstances commercial auto coverage will be required. From there, they can help you purchase an endorsement or a completely separate policy. Even better, your dedicated BrokerLink insurance advisor will shop around to ensure you get the best possible price for your updated policy. If you have questions about how commercial car insurance works, how it differs from personal car insurance, or what risks it can protect you against, you can speak to a BrokerLink insurance broker at any time. What are you waiting for? Get in touch with BrokerLink today and have all your questions answered.


FAQs on personal vehicle for business insurance

Should I use my personal car for business use?

If you are a small or home-based business, using your personal car for business use may be the most cost-effective option. If you choose to go this route, make sure you purchase a valid commercial auto insurance policy. Although this will cost money, the good news is that using your personal vehicle allows you to deduct certain expenses come tax time. For example, you might be able to claim your commercial car insurance premium, in addition to gas, licence and registration fees, parking fees, leasing costs, maintenance and repair costs, and interest accrued on any loans taken out to finance your vehicle.

Can I buy commercial auto insurance coverage for my personal vehicle?

Yes. If you use one vehicle for both personal and business use, you can add a commercial auto insurance endorsement to your personal auto insurance policy. This way, you will be covered at all times when using your vehicle. If you get into an accident on your way to visit a client, you will be covered just the same as if you got into an accident while driving to the grocery store.

What is a business use exclusion on a personal car insurance policy?

A business use exclusion is a clause in some personal car insurance policies that stipulates that business use of the vehicle is not covered. Many personal auto insurance plans include business use exclusions, which is why drivers who use their cars for work must purchase separate commercial auto insurance coverage or endorsements.

What is a business use endorsement on a personal car insurance policy?

The opposite of a business use exclusion, a business use endorsement is a policy add-on that states your vehicle is covered for business use. Such an endorsement increases your coverage, and also your premium, to give you protection in the event that an incident occurs when driving your vehicle for work.

If you have any questions, contact one of our local branches.