Fleet Insurance Requirements

17 minute read Published on Aug 1, 2022 | Last updated Sep 19, 2022 by BrokerLink Communications

Commercial fleet insurance coverage & requirements

If you run a business that operates a fleet of cars, vans, trucks, or any other type of vehicle, you can benefit from the protection offered by having fleet insurance. Save your company from the financial risks that come with operating vehicles for business purposes by purchasing commercial auto insurance, which is available for multiple vehicles as fleet insurance. Continue reading to learn more about fleet insurance, including who needs it and how it can protect you.

What is fleet insurance?

Fleet insurance is commercial auto insurance designed to cover business vehicles. It allows companies to insure multiple vehicles together under one policy, as opposed to purchasing separate policies for each business vehicle.

This specialized insurance type is offered to businesses of all sizes, whether you own five vans or 50 trucks. Plus, just like personal auto insurance plans, fleet insurance policies can be customized to meet your needs. For example, you can choose to insure all drivers on all vehicles or assign named drivers. Contact BrokerLink to learn more about fleet insurance in Canada or read on to learn more.

Who needs fleet insurance?

If your business owns several commercial vehicles, it could benefit from fleet insurance. Generally, fleet insurance is available to all companies that operate a minimum number of vehicles, regardless of whether these vehicles are owned or leased. And, on the other end of the spectrum, fleet insurance can also insure business vehicle fleets of 500 or more. The specific number of vehicles that can be insured by any one business depends on the insurance provider and province. For example, in Ontario, a fleet of vehicles is defined as a minimum of five.

While any type of vehicle can be insured, fleet insurance is very important for companies operating in the transport and customer service sectors. Such companies (moving companies, delivery companies, taxi firms, and long-haul transporters) may be at higher risk of an accident.

Businesses in any industry can purchase fleet insurance but depending on the industry, you may be required to buy specific types of coverage. For example, taxi cab companies may need to purchase public hire or private hire taxi fleet insurance.

If you aren’t sure whether your business meets the minimum fleet insurance requirement, call an insurance broker at BrokerLink to discuss your options. Our commercial auto insurance experts can explain the benefits of fleet insurance and provide you with a free fleet insurance quote.

How does fleet insurance coverage work?

It’s best to describe how fleet insurance works with a little more explanation. A personal auto policy usually covers one person driving their own car, and a secondary or occasional named driver may be added.

A commercial policy covers an entire business which could include multiple drivers and multiple vehicles. A company buys one commercial auto insurance policy to cover all of its business vehicles. The policy can be registered in the name of the company or the name of a director, business owner, or partner. When a fleet insurance policy is purchased, payments can either be made monthly or yearly depending on your personal preferences and feasibility.

Why is commercial auto insurance important?

A commercial auto insurance policy is designed to provide coverage for vehicles used for business purposes – a personal auto insurance policy won’t provide enough coverage for accidents that occur while the vehicle is being driven for business purposes.

If you don’t have a commercial auto insurance policy, you may have to pay out of pocket if you or an employee experiences a collision while using the vehicle for work-related tasks, such as making deliveries and picking up supplies. Commercial auto insurance allows businesses to operate cars without worrying about costly outcomes as a result of an accident or in the event of theft. For example, if one of your employees were to get into an accident on the road without proper commercial auto insurance in place, you could be responsible for expensive medical payments, car repairs, or the cost of a lawsuit.

What is covered by a fleet insurance policy?

Your fleet insurance policy may provide coverage for:

  • Accidents resulting in property damage: If an employee gets into an accident that damages your vehicle, your fleet insurance can help cover the cost of repairing or replacing the vehicle. Depending on the level of coverage, it may even cover towing of the vehicle.
  • Accidents resulting in bodily injury: If someone gets into an accident in your commercial vehicle and the accident causes bodily harm to someone involved, your fleet insurance provider may help cover the costs of any necessary medical or legal expenses.

It is important to note that most fleet insurance policies do not include comprehensive coverage. Basic policies in Canada typically cover the costs associated with lawsuits, medical bills, and vehicle repairs. That said, additional coverage can be purchased to offer greater protection. Keep reading to learn more about the specific coverage types that can be added to fleet insurance policies, or get in touch with BrokerLink to have your questions answered.

Fleet insurance coverage types

As mentioned, fleet insurance is not all that different from personal auto insurance in terms of coverage. The province your business operates in will determine the basic coverage included with your policy.

In Ontario, fleet insurance policies include the following types of coverage: third party liability coverage, direct compensation-property damage coverage, accident benefits coverage, and uninsured automobile coverage. Several optional car insurance types (namely, collision coverage and comprehensive coverage) can be added to most fleet insurance policies. More information about the coverage types are provided below:

Third party liability coverage

Third party liability coverage provides protection if you or an employee get into an accident in a commercial vehicle that injures another person or results in property damage to another person’s property. Under this portion of your policy, you can receive compensation to pay for medical expenses associated with bodily injuries or repairs of a damaged car, as well as any legal fees or court fees up to the coverage limit. In Ontario, all fleet insurance policies must include a minimum of $200,000 in third party liability coverage.

Direct compensation - property damage coverage

Direct compensation - property damage coverage protects a commercial car and its contents from the costs of property damage. This type of coverage only applies if the driver is not liable for the accident that caused the damage. This type of coverage gets its name from the fact that the insurer typically provides direct payment for the damage caused (such as to repair or replace a vehicle).

To receive compensation under the direct compensation portion of your fleet insurance policy in Ontario, the incident must meet the following criteria: it happened in Ontario, it involved multiple cars, and it involved at least one car that participates in the province’s car insurance program.

Uninsured automobile coverage

Uninsured automobile coverage protects you and any passengers in your commercial vehicle if you get into an accident with an at-fault driver who is uninsured or underinsured. This type of coverage also protects company cars against hit-and-runs. Uninsured automobile coverage covers medical expenses relating to injuries, car repairs due to damage, lost wages, and more.

Accident benefits coverage

The final type of mandatory fleet insurance coverage in Ontario is accident benefits coverage. If you, a passenger, or a pedestrian requires medical attention following a collision, accident benefits coverage comes in handy. Protection is offered regardless of which party was at fault for the collision and can help cover loss of income, medical expenses, such as prescription medications, physical therapy, or rehabilitation, and more.

Collision coverage

Collision coverage, which is optional, protects the company if an insured employee gets into an accident with another vehicle or object on the road, no matter who is responsible for the accident. Under the collision coverage section of your policy, you can receive compensation to help pay for any property damage that resulted from the collision, like vehicle repairs.

Comprehensive coverage

Comprehensive coverage is one last fleet insurance coverage type and it is optional. It can protect your business’ fleet of vehicles against many risks that standard car insurance coverage does not. So, if you purchase comprehensive coverage, you can be protected against theft, vandalism, fire, water damage, falling objects, and more. Ultimately, comprehensive coverage may provide business owners in Canada with peace of mind knowing their commercial vehicles are protected in a wide range of circumstances.

What kind of fleet insurance policy should I choose?

When purchasing fleet insurance in Canada, you will need to decide whether to purchase an any driver or named driver policy. The key difference between the two is that an any driver policy allows your employees to drive any one of your commercial vehicles, whereas a named driver policy only allows certain employees to drive certain vehicles.

Typically, any driver fleet insurance policies come with higher premiums. However, they also offer more flexibility, which might be a priority for large companies with lots of employees. That said, any driver policies can be expensive especially if a young or high risk driver is added to the policy.

If your business currently employs young or high risk drivers, you may want to enquire about an any driver policy with named drivers. An insurance broker at BrokerLink can help you find a fleet insurance policy that combines the best of both worlds. For example, some insurance providers offer any driver policies where a company can insure the majority of its drivers on all vehicles, save for the young or high risk drivers who can be named to specific vehicles. This can help keep your premiums as low as possible.

However, if you operate a small business, a named driver fleet insurance policy might make the most sense. While less flexible, they are usually more affordable and the flexibility may not be as big an issue for small companies that can assign each employee to a specific vehicle.

If you aren’t sure whether an any driver or a named driver insurance policy is right for your business, contact BrokerLink today.

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How much does fleet insurance cost?

The cost of fleet insurance varies by the insurance company, business, and province and insurance providers take many factors into account. Both business-specific and vehicle details can influence the cost of fleet insurance. However, there are a few key factors all businesses should be aware of when requesting a fleet insurance quote:

  • The industry of your business
  • Your business procedures
  • The location of your business (including the specific details of where the vehicles are typically parked)
  • Your employees’ or drivers’ driving records and level of experience (in years)
  • The ages and genders of your business’ employees or drivers
  • The number of kilometres each vehicle logs annually
  • The year, make, model, and value of each vehicle in your fleet
  • Insurance claims history
  • Types and value of goods transported (if applicable)
  • Percentage of travel abroad (to the U.S.)
  • Coverage limits, types, and deductibles you choose

The benefits of commercial auto insurance

Fleet insurance offers several advantages to businesses. A list of the top benefits of commercial auto insurance can be found below:

1. More convenient

Fleet insurance allows businesses to insure multiple vehicles under the same policy. Without it, they might be left to insure each vehicle individually, which would be inconvenient, not to mention a major hassle. Therefore fleet insurance policies translate to less paperwork and fewer payment deadlines to keep track of. This gives business owners more time to focus on operating their company.

2. Less expensive

In addition to being more convenient, purchasing one fleet insurance policy for all company vehicles is usually cheaper than having multiple individual policies. If your fleet is large in size, you save a large sum of money by investing in fleet insurance. Doing so typically results in lower premiums as insurance companies may offer a discount to companies insuring lots of vehicles at once.

3. Greater flexibility

Fleet insurance is very flexible. When you buy fleet insurance, you can choose which vehicles to insure within the fleet, which types of vehicles are covered by the policy, and even which drivers are covered on which vehicles.

What else should you know about commercial auto insurance?

Although commercial auto insurance offers a wide range of advantages to businesses in Canada, there are a few specific details you should be aware of:

1. Fleet insurance premiums are calculated on all drivers’ risk levels

The cost of fleet insurance depends on several factors, as mentioned above. One of these key factors is the driving records and experiences of each driver in your business. Since fleet insurance premiums are calculated based on the risk of all drivers, one young or high risk driver could be enough to significantly increase your insurance premium. That said, businesses usually have options if one or more of their drivers is young or high risk. For example, they can choose a named driver policy or a flexible any driver policy that allows you to name only those at high risk to specific vehicles.

2. Larger fleets benefit more than smaller fleets

Fleet insurance policies tend to be more beneficial for businesses with larger fleets. This is because they generally work as follows: the more vehicles your business operates, the more savings you will benefit from. This is especially true if you are insuring young drivers under your fleet insurance policy.

3. Policy exclusions and conditions

Most insurance policies feature specific exclusions and fleet insurance policies are no different. Depending on which exclusions come with your fleet insurance policy, they could impact your business. For example, some insurance providers might prohibit private use of the fleet, meaning that no employee would be able to drive the vehicle for personal use. This could be a major problem for some businesses. Further, many fleet insurance policies require businesses to notify them of any changes to the fleet. If the business fails to do so, the policy might be invalidated or cancelled.

Tips for saving money on your fleet insurance policy

Here at BrokerLink, we believe that fleet insurance should never break the bank. Rather, it should be available to businesses of all sizes and profits. To help save you money on your fleet insurance policy, the experts at BrokerLink have put together a few tips for finding cheap commercial auto insurance:

1. Enrol drivers in driving courses

Enrolling in an approved driving course, especially for young drivers, can help to reduce the cost of fleet insurance. Graduating from driving school shows the insurance company that a driver is safe and responsible and at a lower risk of getting into an accident.

2. Limit employee driving age to 25 and over

The age of your employees or drivers can directly impact the cost of your fleet insurance policy. Young or new drivers can increase how much you pay for fleet insurance. Therefore, one way to keep costs down is to limit the employee driving age. For example, you may wish not to insure drivers below the age of 25. Alternatively, you can opt to have drivers under the age of 25 or 30 insured as named drivers to avoid raising your premium unnecessarily.

3. Implement a driver risk assessment process

A driver risk assessment process is an example of a business procedure that can help keep fleet insurance rates low. For example, by implementing a driver risk assessment process, you can vet drivers before hiring them to ensure they have clean driving records. The better the records of your insured drivers, the lower your premium will be.

4. Invest in vehicle safety features

Another business policy that might save you money on fleet insurance is choosing to invest in vehicles with safety features. Modern vehicles come with all kinds of risk management technologies, from emergency braking to lane assist. The more safety features your commercial vehicles are outfitted with, the less likely your drivers are to be involved in accidents.

5. Install telematics devices in vehicles

Telematics (user based insurance or UBI), is another effective way of saving you money on fleet insurance. This technology assesses how safely your employees drive and if they are found to be responsible drivers who obey the rules of the road, you could benefit from lower premiums. Telematics provides insurance providers with peace of mind and greater transparency.

6. Store vehicles in a safe place

Where you store your parked vehicles matters. Storing them in a safe and secure location can save you money on fleet insurance. Ideally, businesses should aim to store their vehicles in locked and covered areas, such as a security-monitored parking garage. Storing your fleet in a safe place will reduce the risk of it being stolen, which can lower your premium.

7. Increase your deductible

One final way to save money on fleet insurance is to increase your deductible. Increasing your deductible (the amount the policyholder is responsible for paying towards an insured loss), can significantly lower your fleet insurance premium. In essence, the higher your deductible, the less risk the insurance company has to take on. However, your deductible should only be raised to an amount your business can afford. Speak to a BrokerLink expert before increasing your deductible to learn more about the pros and cons of doing so.

Contact BrokerLink today

Still have questions about fleet insurance requirements in Canada?

BrokerLink insurance advisors are experts in commercial car insurance and more . Our advisors can help you find a policy that meets your business’s unique needs and budget. Get in touch today to ask any questions you may have. BrokerLink can be reached by phone, email, or in person at any of our locations across Canada.

Of course, we also invite Canadian business owners to take advantage of our free commercial auto insurance quotes. BrokerLink is pleased to offer fully complimentary, no-obligation fleet insurance quotes to businesses of all sizes in Canada. Request your free quote over the phone or using our online quote tool. To request a quote online, all you need to do is answer a few basic questions about yourself, your business, and your fleet of vehicles. From there, you’ll receive an accurate and competitive quote in no time.

If you’re ready to take the plunge and protect your business with fleet insurance, contact BrokerLink today. We look forward to hearing from you!

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FAQs

What is the difference between a commercial auto policy and a fleet vehicle insurance policy?

The terms commercial auto insurance and fleet insurance are often used interchangeably. However, there is one key difference. While both are designed with company vehicles in mind, commercial auto insurance policies can protect one vehicle, whereas fleet insurance insures multiple commercial vehicles (usually a minimum of five). In addition, since fleet insurance is designed for multiple vehicles and drivers, it gives businesses more options when it comes to insuring their employees (e.g. the choice between an any driver or a named driver policy).

No matter what kind of auto insurance policy you choose for your business, you can rest easy knowing your vehicles will be protected. Both types of policies include similar coverages in Ontario, including third party liability coverage, accident benefits coverage, direct compensation - property damage coverage, and uninsured automobile coverage. As well, both commercial auto insurance policies and fleet vehicle insurance policies can cover a wide range of vehicle types, from SUVs and vans to trucks and passenger cars.

How can I save money on my fleet insurance policy?

Enrolling your drivers in driving courses, purchasing vehicles with safety features and anti-theft devices, installing winter tires on your commercial vehicles during the winter months, buying eco-friendly vehicles (e.g. hybrid or electric vehicles), minimizing the number of claims filed, and increasing your deductible can all result in cheaper fleet insurance policies.

How can I prevent my commercial auto insurance rates from rising?

One of the best ways to prevent your commercial auto insurance rates from rising is to ensure your employees operate all vehicles safely and responsibly. Clean driving records are key to low insurance premiums. If you aren’t confident in the driving skills of your team, consider enrolling employees in a defensive driving course. Another way to keep rates from rising is to implement policies that prioritize driving experience and record. For example, before hiring someone new, request a copy of their driving record to learn more about their habits and experience. You may also wish to avoid hiring employees under the age of 25 or 30 for roles that require driving.

How many vehicles can you cover with fleet insurance?

The number of vehicles covered by fleet insurance varies by the insurance company. Typically, fleet insurance can be purchased for fleets of up to 500 vehicles.

How do I get fleet insurance?

Fleet insurance is crucial for any businesses in Canada that operate vehicles. However, fleet insurance policies are complex. For this reason, we recommend speaking with a qualified broker before purchasing a policy.

For more FAQs, visit the BrokerLink FAQs page.