It can be tricky for self-employed people or owners of small businesses in Alberta to distinguish their personal activities from business-related ones. But for car insurance purposes, it is absolutely essential that this distinction is made, as it affects your insurance policy. If your vehicle is covered by a personal car insurance policy, your insurer may not honour the claims you make if it damaged while the vehicle was being used for commercial purposes in Alberta or otherwise.
Understanding Using a Personal Car for Business in Alberta
To avoid having your claim rejected due to wrong use of a personal vehicle, carefully determine how exactly you use your vehicle first. Choose the right insurance coverage for that use, or have a broker help you decide.
In Alberta, your personal car insurance policy serves to protect you and any other individuals named on your policy. Car insurance companies have clear definitions of what a personal car is and what it’s supposed to be used for. A personal car is registered as such and it is used for personal trips – errands, leisure, and to and from work (in most cases).
A commercial vehicle policy, on the other hand, covers vehicles used for business purposes, even if it is also used for personal use and even if the vehicle is not registered as a commercial vehicle. Confused? Don’t worry – it can be tough to define the thin line separates personal and commercial policies. Here are some examples to help:
- Driving to pick up pizzas for your coworkers is covered by your personal car insurance policy, but if you’re picking up pizzas to sell later in your cafe, you’ll want a commercial vehicle policy.
- Giving a coworker a lift home after hours? No problem, you’re covered under your personal policy. But you won’t be covered if you’re being paid to drive coworkers or guests around the city.
- Always meet clients at your office? Great! You only need a commercial policy if you’re regularly driving to meet them elsewhere.
- If you’re working on a project and now need to drive to a distant work site, or need to travel between a few, you should look into commercial vehicle insurance. If you just have a long commute to an office, your personal car insurance should cover you.
- Are you ever asked to make deliveries to customers? Transport company-owned tools and equipment? Or pick up goods for your store? You should have commercial vehicle insurance.
- You lend your truck to a coworker to bring their trailer home while their truck is in the shop – you’re covered by your personal insurance. But if you lend your truck to a coworker who then uses it to move company equipment, you should have a commercial insurance policy. This is also the case if you charge that coworker to use your vehicle.
Keep in mind that you’re using your personal car in the above scenarios – that’s what you’d need the commercial vehicle coverage for. If you’re doing any of the above in a company-owned vehicle, you don’t have to worry about it.
Choosing the Right Coverage
In general, the rule is that you will require commercial vehicle insurance if your vehicle is used for anything work-related above-and-beyond a regular commute. Even if you consider it to be your personal car and regardless of the percentage of time you use it for business purposes. While definitions can vary between companies, business use includes:
- Transporting company-owned tools and equipment or goods
- Transporting any goods or passengers for a fee (such as Uber or Lyft or Turo)
- Driving to various places to meet with clients
- Long-distance commute to work sites or having to travel between multiple work sites
- To pick, collect, and/or deliver company products
- Renting or leasing your vehicle to others (charging a fee to use it)
- Employees are driving your vehicle
It can be hard to define personal versus commercial use sometimes, especially if it’s not consistent. That’s why we recommend talking to a broker, especially if you’re a small business.
Once you determine that you will be using your car for commercial purposes, regardless of the percentage of time you intend to do so, your safest course is to get commercial vehicle insurance. These policies vary, but your options will typically include the following:
- Collision: covers damage to your vehicle when it hits or is hit by another vehicle or object.
- Liability: covers third party liability for damage, injury and death, including legal assistance and medical expenses.
- Comprehensive: covers more perils such as fire, flood, theft, and vandalism.
Like personal car insurance policies, commercial vehicle policies also have many different add-ons, known as endorsements, available. This includes having a rental car available if your vehicle is involved in an accident, coverage when you rent a car on a business trip, and more. Commercial vehicles are also eligible for certain discounts.
It’s best to speak to a broker about how you use your vehicle. They can help you determine which policy is best for you.