Do I need commercial insurance?

12 minute read Published on Apr 7, 2016 by BrokerLink Communications

Do I need commercial insurance?

If you operate a business in Canada, then you may be wondering if you need commercial insurance. In this article, we provide insight into whether commercial insurance is required, as well as dive into the importance of commercial car insurance, small business insurance, and more.

Business insurance requirements in Canada

Before we explain the importance of commercial insurance, let’s cover insurance requirements for businesses in Canada. Many Canadian business owners wonder if commercial insurance is mandated by law. In Canada, the government does not require businesses to purchase commercial insurance, unless they operate a company vehicle, due to auto insurance being mandatory in Canada, in which case auto insurance is legally required. Therefore, although business insurance is not a legal requirement the same way that car insurance is, it doesn't mean it isn’t vital for businesses. In fact, you will be hard-pressed to find many Canadian businesses without commercial insurance coverage owing to the benefits it offers. Namely, commercial insurance is designed to protect businesses from a wide range of risks, such as liability risks, property damage, bodily injury, employee theft, and more.

The benefits of commercial insurance

Learn more about the benefits of purchasing commercial insurance below:

Commercial insurance helps mitigate financial losses

First, commercial insurance can help your business avoid a major financial loss following an incident. For instance, if a fire broke out in your retail store and damaged your shop and inventory, commercial property insurance could help cover the costs of repairing or replacing the damage. Similarly, with small business liability insurance, if a customer were to bring a lawsuit against your business, your insurer may cover the costs of the lawsuit, such as defence or settlement fees. Without commercial insurance, you would be forced to pay for these costs out of pocket, which could eat into your business’s profits and have long-term ramifications for your business’s financial health.

Commercial insurance makes your business look more credible

A second benefit that comes with purchasing commercial insurance is that it makes your business look more credible. Customers, clients, and more will know that they are working with a business that is insured. This instantly boasts your reputation. It is also worth noting that some clients may refuse to work with businesses that do not have insurance. Therefore, if you chose not to purchase commercial insurance coverage, you could be losing out on potential business. Having a business insurance policy may also help in client negotiations.

Commercial insurance can save your business money

Did you know that in the long run, purchasing business insurance coverage can actually save you money? That’s right. Insurance coverage, coupled with an effective risk management strategy could save your business money down the line. Examples of useful risk management strategies include ensuring workplace safety at all times by holding regular training sessions, offering employees in-depth training on any business equipment or machinery, and having an attorney review all contractors to make sure they are clear and easy to understand. Given how expensive things like claims or lawsuits can be, the right insurance coverage could easily pay for itself after only a couple of lawsuits. Plus, BrokerLink has a team of commercial insurance experts that can help you save money on your coverage in the first place. We aim to keep rates as low as possible.

Commercial insurance can protect your business from unforeseen incidents

Next, commercial insurance can protect your business from unforeseen incidents. Comprehensive coverage can not only help pay for the cost of repairs or replacements following an unexpected event, but it can also reimburse you for any income lost due to the unforeseen event. For example, commercial insurance may compensate you for ongoing bills while your place of business is temporarily closed, such as rent, loan payments, or employee wages.

Types of business insurance

Now that you know a little bit more about the benefits of insurance, let’s delve into the types of commercial insurance available to businesses in Canada. From commercial general liability insurance to builder’s risk and contractor insurance, keep reading to discover a few of the coverage options you may be able to select for your business:

  • Commercial general liability insurance
  • Employer liability insurance
  • Employment practices liability insurance
  • Employee benefits liability insurance
  • Directors and officers/management liability insurance
  • Legal expenses liability insurance
  • Commercial property insurance
  • Builders risk insurance
  • By-law policy insurance
  • Commercial earthquake insurance
  • Overland water insurance
  • Sewer backup insurance
  • Equipment breakdown insurance
  • Cyber risk/cyber liability insurance
  • Tool floater insurance
  • Business interruption insurance
  • Crime insurance
  • Umbrella insurance

Commercial auto insurance

Another type of insurance coverage that we must discuss is commercial auto insurance. As mentioned above, commercial auto insurance is the only type of business coverage that may be legally required. This is because auto insurance is mandated by the government in Canada, and driving a vehicle without adequate coverage is illegal. Therefore, if you use a vehicle for business purposes, such as to transport materials to and from job sites or to deliver products to and from customers’ homes, you will need to purchase commercial auto insurance. In Canada, any car used to transport materials, goods, clients, tools, or equipment typically requires commercial auto coverage. Even if you or your employees use personal vehicles for business use, you must still notify your insurance provider. Most personal car insurance policies do not cover business use, so you will need to purchase additional coverage in the form of a rider or endorsement. We dive into the world of commercial auto insurance below:

Commercial auto insurance defined

Commercial auto insurance, which may also be referred to as commercial car insurance, commercial vehicle insurance, or business auto insurance, is a type of commercial insurance that applies to automobiles owned or used by your business for business purposes. Whether it means using the vehicle to transport staff, clients or business materials. Commercial auto insurance is designed to protect your business against the risks that come with operating a vehicle, such as liability for damages that occur during a car accident. Ultimately, commercial insurance offers financial protection to your business, above and beyond what a standard business insurance policy offers. Since vehicles are a key component of many businesses’ operations, a single collision or a stolen work vehicle could put your company at risk. But with commercial auto insurance, your business, along with its drivers and vehicles, whether they be delivery vans, pickup trucks, vans, or sedans, will be protected.

Personal car insurance vs. commercial car insurance

It is important to note that personal car insurance and commercial car insurance are not the same. Therefore, even if you have a personal car insurance policy, the coverage is inadequate while driving a car for business purposes. As you might expect, personal auto insurance is designed for individuals while commercial auto insurance is designed to serve the needs of businesses. Therefore, a personal car insurance policy does not cover business use and a commercial car insurance policy does not cover personal use. For instance, if one of your employees got into an accident while delivering equipment to a client using their personal vehicle, their personal car insurance company would likely deny a claim unless you had previously purchased a commercial add-on. Similarly, your commercial insurance provider would also deny your claim unless you specifically added commercial auto coverage to your policy.

Does my business need commercial auto insurance?

Generally speaking, businesses in Canada need commercial auto insurance coverage if they meet the following criteria:

  • You use a vehicle or multiple vehicles for business purposes, such as to make deliveries, visit clients, or transport materials or equipment.
  • You drive large commercial vehicles that could result in more damage than the average passenger vehicle if an incident occurred.
  • The vehicle you drive is owned by the business and primarily used for business purposes.

A few examples of occupations or industries that typically require commercial auto insurance include:

  • Contractors
  • Construction workers
  • Delivery services
  • Driver training or education services
  • Taxi or rideshare services
  • Personal emergency services
  • Maintenance works

That said, any business in Canada that meets any of the criteria listed above should speak to a BrokerLink insurance advisor about adding commercial auto coverage to their policy.


The cost of commercial auto insurance

Commercial auto insurance ranges in price as no two businesses are the same. Calculating the average cost of commercial auto insurance is therefore difficult as it is so personalized. That said, BrokerLink can let you in on some of the factors that insurance companies use to calculate rates. For instance, the number of vehicles your businesses use, the types of vehicles used year, make and model, the number of employees who drive your business vehicles, the driving records of all drivers, and the coverage limits, types, and deductibles you choose can all influence how much you pay for commercial car insurance. For an accurate commercial auto insurance quote, contact BrokerLink today.

How to save money on commercial auto insurance

No matter how much your commercial auto insurance policy costs, we all love saving money on insurance. Thankfully, BrokerLink is here to provide some expert tips on how you can save money on commercial auto insurance. Reduce your insurance costs by following this advice:

Select the best vehicles for your business

Before purchasing commercial auto insurance coverage, think carefully about the best type and number of vehicles. Keep in mind that the more business vehicles in operation, the more your policy is likely to cost. In addition, there are several vehicle-specific factors that can influence premiums, like safety ratings, value, and more.

Choose drivers wisely

An insurance company will review the driving records of each employee that regularly drives your business vehicles. Therefore, we recommend choosing your drivers wisely. The cleaner the driving records of your business’s drivers, the lower your premium will be. You may even consider having your employees enrol in a safe or defensive driving course to qualify for a discount.

Inquire about commercial car insurance discounts

Make sure you speak with a broker about any discounts you may be eligible for on commercial auto coverage. There are a wide range of car insurance discounts out there, from telematics to winter tire discounts.

Drive safely at all times

Save money by prioritizing driver safety at all times. If you obey the rules of the road and drive defensively rather than offensively, you can save money on car insurance. In fact, if your business maintains a clean driving record, you may even qualify for a safe driver discount.

Install security systems in your company cars

Insurance companies have been known to reward customers who take extra steps to ensure the safety of their cars, such as by installing security systems, dash cameras or anti-theft devices in them. The installation of such devices could significantly reduce the odds of one of your business vehicles being stolen.

Tips to find the right commercial insurance for your business

Follow the tips below to find the ideal commercial insurance policy for your business:

Take the time to shop around

Our first tip for finding a great policy is to shop around. There are so many insurance companies and policies out there that it wouldn't make sense to settle for the first one you find. If shopping around for insurance seems tedious, contact a BrokerLink insurance broker who can shop around for you. A broker will ensure you get the best coverage at the lowest possible price.

Ask a broker to walk you through your policy

Whether this is your first time purchasing a commercial insurance policy or not, it’s a wise idea to have an insurance broker walk you through the policy. Pay close attention to what is included and excluded from your policy. All insurance policies have a clear list of exclusions or limitations that is important to be aware of. Knowing the terms and conditions of your policy from the get-go will save you a lot of stress down the line.

Consider bundling insurance policies

Who doesn’t love saving money on insurance? One of the best ways to save money on commercial insurance is by bundling it with other insurance products. Many insurers offer discounts to customers who purchase two more insurance products from them. So if you’re looking to buy multiple types of business insurance or even a home or auto insurance policy on top of business insurance, inquire about bundles and you could save between 15% and 20%.

Work with a broker to review your coverage before it expires

The reality is that commercial insurance needs change, especially as your business grows. Therefore, it is smart to review your coverage before the end of the term. Rather than letting your policy automatically renew or expire completely, have an insurance broker read through your policy and recommend updates, such as increases or decreases in coverage limits, deductibles, and more. The goal is to ensure your commercial insurance policy evolves with your business.

Take additional steps to minimize risk

Risk management is critical for any business and goes hand-in-hand with insurance. If you want your business to be as safe as possible, make sure to adopt a risk management strategy that can help you avoid risks. It can also be important to maintain equipment on a regular basis to avoid malfunctions or accidents.

Business insurance quotes

Now that you know more about commercial insurance in Canada, you may be wondering about the cost. The most effective method of finding out how much business insurance will cost you is to request a free business insurance quote. BrokerLink is pleased to provide business insurance quote information that makes obtaining a quote that much easier. The best part is that BrokerLink’s commercial insurance quotes are all free of charge. Simply use our online quote tool or give us a call and request a quote over the phone. A BrokerLink representative will be pleased to provide you with an accurate and competitive quote that is 100% obligation-free. A BrokerLink insurance advisor can also inform you of the various factors that insurance companies use to calculate insurance quotes for businesses.

Get in touch with BrokerLink to discuss your business’s commercial insurance needs

If you want to discuss your business’s commercial insurance needs in greater detail, contact BrokerLink today. We have an entire team of business insurance experts on hand to help you determine the best coverage for your business. We can answer your business insurance questions and even debunk some of the most popular business insurance myths. Of course, we can also provide you with a free commercial insurance quote and walk you through the various coverage options out there. For all your business insurance needs, you can count on BrokerLink. Get in touch today to learn more about our all-encompassing commercial insurance services. We can be reached by email or phone. You can also visit us in person at any one of our 200+ locations in Canada.


FAQs on commercial insurance

I operate a home-based business, do I still need to purchase business insurance?

Yes, if you run a business out of your home, then the odds are your home insurance policy doesn’t cover it. Therefore, you will need to purchase commercial insurance. Luckily, home-based business coverage is designed to cover home businesses just like yours. With this type of policy, you can rest easy knowing that if a loss or damage relating to your business activities occurs in your home, your policy will protect you.

How can I save money on business insurance?

One of the best ways to save money on business insurance is by implementing a risk management strategy that allows you to reduce risk. Remember, the fewer claims you make, the lower your business insurance costs will be. Beyond creating and implementing a risk management strategy, working with an experienced insurance broker can also help you save money. Insurance brokers have all kinds of tips for saving money on commercial insurance. They can also notify you about any discounts you may be eligible for.

Can I change my business insurance coverage after purchasing it?

Yes, if you decide that your current business insurance policy is no longer serving your business, you can update it. Speak with a broker about the benefits of updating your policy or for advice on how you should update it. For example, an insurance broker can give advice on which types of extra coverage might be worthwhile for your business, such as crime insurance, employee benefits liability insurance, cyber insurance, and more. From there, a broker can also help adjust your policy.

What kinds of businesses need commercial insurance?

All types of businesses could benefit from commercial insurance - small businesses, large corporations, and everything in between. In addition, businesses across a wide range of industries need insurance, including doctors, yoga instructors, wedding planners, contractors, and much more.

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