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What is commercial fleet insurance?
Commercial fleet insurance is a type of auto insurance policy designed specifically for small businesses that own or operate multiple vehicles. It allows companies to insure all their vehicles under one policy, simplifying the management of insurance and potentially reducing costs of insuring each vehicle individually.
Who needs commercial fleet insurance?
It covers cars, trucks, vans, and other specialized vehicles that are used to transport goods, employees, or equipment. Some examples of small businesses that require commercial fleet insurance include delivery services, transportation companies, handyman, home repair or technician services, and construction companies.
Commercial fleet insurance typically includes:
- Third-party liability: Provides coverage for damages and claims to a third-party in the event of a collision.
- Accident benefits: Provides coverage for medical expenses and income replacement for your employee driving a company vehicle and involved in a collision.
- Uninsured driver: Provides coverage for damages and losses if your employee is injured or killed by an uninsured motorist or in a hit-and-run accident.
What’s covered and not covered by commercial fleet insurance?
It's important for businesses to carefully review their insurance policy with the insurance provider to avoid gaps in coverage. Here’s a breakdown of coverages that are included and excluded from a standard commercial fleet insurance policy.
| What fleet insurance covers | What fleet insurance doesn't cover |
|---|---|
| Third-party liability: Coverage for damages and claims from a third-party. | Unlisted employees: Only employees specifically named on the policy are eligible for coverage. |
| Accident claims: Coverage for medical expenses and income replacement for employee injured in a collision. | Personal use: Damages or claims arising from the use of the vehicle for personal use is not covered. |
| Uninsured or underinsured driver claims: Coverage for damages where the other driver does not have insurance or insufficient coverage. | Regular wear-and-tear: Damages or claims arising from wear-and-tear or maintenance issues are not covered. |
| Collision claims: Optional coverage for damage from collisions with another vehicle or object is available. | Some kinds of vehicles: Certain vehicles, like tractors, forklifts, or motorbikes are not covered. |
| Comprehensive claims: Optional coverage against theft, vandalism, fire, and natural disasters is available. | Contents: Movable contents (power tools, ladders, and safety equipment, for example) require tools and equipment insurance. |
Personal auto insurance vs. commercial auto insurance vs. commercial fleet insurance
At the outset, it might seem like personal auto insurance, commercial auto insurance, and commercial fleet insurance are similar. They are, after all, types of auto insurance policies. But there’s a difference between what they specifically cover.
| Personal auto insurance | Commercial auto insurance | Commercial fleet insurance |
|---|---|---|
| Covers personal use, like leisure travel and commuting. Policy limits are lower, as personal use is considered less risky. Excludes coverage for business-related activities. | Designed for individual vehicles used for business purposes. Each vehicle requires a separate policy. Ideal for businesses with fewer than five business-use vehicles. | Intended for businesses that use five or more vehicles. Commercial fleet insurance covers multiple vehicles under one insurance policy. Often more cost-effective. |
Types of insurance claims that are common to commercial fleet insurance
Here are three scenarios that illustrate how fleet insurance can provide the necessary protection to keep your business running.
Employee collision sparks legal battle
While driving the company vehicle, your employee gets into a collision and is found to be at-fault. The third-party sues your company for damages. Thankfully, your commercial fleet insurance’s third-party liability coverage kicks in and covers the cost of the injured driver’s medical expenses, as well as court expenses and settlement costs.
Insurance safeguards employee from uninsured driver
An employee driving the company vehicle is hit by a driver who has no insurance. The car is heavily damaged, and the employee is injured. Your commercial fleet insurance’s uninsured or underinsured motorist coverage pays for vehicle damage and the employee’s medical expenses.
Comprehensive coverage shields fleet from hailstorm damage
Due to a severe hailstorm, several vans parked in the company’s parking lot are damaged with broken windshields and dents on the roof. Your commercial fleet insurance’s comprehensive coverage (if included) kicks in and covers the cost of damages.
How much does commercial fleet insurance cost?
The cost of commercial fleet insurance in Canada varies widely based on several factors, including the number and type of vehicles in your fleet, the type of business you run, and your employee’s driving history.
- Driving record: As with personal auto insurance, the driving record of employees using the commercial vehicle impacts fleet insurance rates. If drivers have a history of traffic violations or collisions, it can lead to higher insurance rates. Implementing safety training programs or a mandate of a clean driving record from your employees can help lower costs.
- Number and type of vehicles: A larger fleet means higher premium. Additionally, due to their repair cost, trucks or vans generally have higher premiums than smaller cars.
- Type of business: The nature of your business and how the vehicles is also used to determine commercial fleet insurance rates. Moving companies, with large container trucks will be more expensive to insure than courier services.
- Distance travelled: The longer the distance that a truck or vans travel, the greater the risk, and therefore, higher the premiums.
- Location: Similarly, vehicles operating in high-traffic areas or have higher incidents of theft are seen as higher risk.
- Coverage requirements: The amount of coverage you choose will directly affect premiums – higher limits and comprehensive coverage, for example, leads to higher rates.
What can I do to get the cheapes fleet insurance quote?
Here are some ways to obtain the cheapest commercial fleet insurance rates:
Shop around
Compare quotes from different insurers to find the best rate for your business
Hire experienced drivers
Hire experienced, safe drivers to qualify for lower fleet insurance rates.
Implement safety programs
Regular safety training programs for drivers can reduce premiums.
Use telematics
Install telematics devices to monitor driving behaviour and potentially, lower rates.
Regular vehicle maintenance
Ensure that your vehicles are well-maintained to prevent frequent claims and avoid higher premiums.
Opt for vehicles with lower insurance rates
Vehicles with high safety ratings and lower repair costs reduces your premiums.
Consolidate your fleet
Most auto insurance companies give special discounts to customers who stay with them for a number of years.
Secure parking
Park your fleet in secure locations to minimize the risk of theft and vandalism.
Review your policy annually
Regularly your insurance policy yearly to ensure it meets your needs and adjust coverage as needed.
Train drivers
Provide ongoing training for your drivers to ensure they follow best practices and stay safe on the road.
Ask for discounts
Inquire about available discounts, such as those for being claims-free, implementing safety features, or being a long-term customer.
Limit vehicle use
Restrict the use of fleet vehicles to business purposes only. Personal use can increase risk and premiums
Your commercial fleet insurance questions, answered.
Is fleet insurance mandatory in Canada?
Commercial fleet insurance is not mandatory in Canada. However, insurance for every type of automobile – be it vehicles, trucks, or vans – is mandatory. Driving without auto insurance is a serious offense and has consequences like fines, licence suspension, and vehicle impoundment. Commercial fleet insurance allows you to consolidate individual commercial auto insurance policies under one plan and offers potential savings on fleet insurance.
If I have multiple vehicles are renting out via Turo, do I need fleet insurance?
Commercial fleet insurance is meant for businesses that operate more than five vehicles. If you’re renting out through Turo or other peer-to-peer car sharing services, you do not need to obtain fleet insurance as you will be covered by the platform’s insurance policy.
Does fleet insurance cover my personal usage on my fleet vehicles?
If you plan to use fleet vehicles for regular personal use, you will need additional personal insurance coverage to ensure that you’re adequately protected. Infrequent personal use may be covered, but it depends on the vehicle type; ones with specialized shelving, refrigeration units, or tool racks, may be excluded. Be sure to carefully review the specifics of your fleet insurance policy and consult with a broker to understand the extent to which you are covered.
Shaistha Khan
About the Author
Shaistha Khan is a freelance writer in the personal finance space. She is a journalist, writer, and communications specialist with 12 years of experience across the oil and gas, business and professional development, and travel and tourism industries. She has lived in Saudi Arabia for nearly three decades, and reported on some of the first-ever events in the country. She has also reported from the United Arab Emirates, Bahrain, Qatar, India, and Houston, USA. Her work has been published in BBC Travel, USA Today, Al Jazeera, Teen Vogue, Travel + Leisure, Lonely Planet, Vogue Arabia, and several in-flight magazines. She has also worked with tourism boards and hotel chains on sponsored content.
She holds a Master of Business Administration degree (MBA) and a diploma in Public Relations and Reputation Management.