Do I need fleet insurance for my small business?

For businesses that use multiple vehicles as part of day-to-day operations, managing multiple commercial insurance policies can be tough, not to mention expensive.  

But if your business needs to insure five or more vehicles, fleet insurance could allow you to fit them all under a single policy. 

What is the difference between commercial auto insurance and fleet insurance? 

Commercial auto insurance is typically intended for individual vehicles used for business purposes, providing coverage for accidents, theft, liability, and other risks. It works well for smaller operations with one or two vehicles. 

Fleet insurance, on the other hand, is a type of commercial insurance policy that covers a larger number of business vehicles under one policy.  

There’s no hard and fast rule for the number of vehicles that constitutes a fleet, and it can vary from one provider to another. That said, a fleet is generally five or more vehicles.  

ICBC’s Fleetplan insurance program, for example, is open to businesses looking to insure more than five vehicles under one plan.  

Fleet coverage can apply to cars, vans or trucks, but also to vehicles like bulldozers and more specialized equipment, like construction rigs. Essentially, if your business relies on motorized vehicles for day-to-day operations, fleet insurance could cover them all under one easy-to-manage policy. 

When should you upgrade from commercial auto insurance?

If your business grows beyond just one or two vehicles, it might be time to consider moving on from simple commercial insurance. 

Firstly, having to manage multiple standalone commercial vehicle policies can be a headache, and much less efficient as you scale up. Fleet insurance streamlines the entire insurance process and should save you time while also potentially reducing premiums. 

You may also want to upgrade if your vehicle needs are diverse, such as a fleet that includes a mix of vehicle types.  

On top of that, fleet insurance can also be useful for businesses that have multiple drivers, or frequently rotate who’s behind the wheel, since this kind of policy can provide blanket driver coverage for all of your authorized drivers. 

Which coverages are included in fleet insurance? 

Fleet insurance offers a typical range of coverage, designed to protect your business vehicles and their drivers.  

Among mandatory coverage is third-party liability coverage, which shields your business from financial losses if one of your vehicles is involved in an at-fault accident. Typically, this policy will help cover legal fees, medical expenses, and repair costs for affected third parties.   

Direct Compensation-Property Damage (DCPD) is another essential feature, covering damage to your vehicle and its contents when you or your driver isn’t at fault. Instead of navigating claims through the at-fault driver's insurance, DCPD simplifies the process by compensating you directly. (As of January 2024, the Ontario government has made it optional to remove DCPD from all auto insurance policies – though it is included by default in most policies and is highly recommended for almost all drivers.)   

Accident benefits are also mandatory, and offer support for medical expenses, rehab, and more depending on the policies available to you in your province. 

Fleet insurance can also provide collision and comprehensive coverage, helping you to avoid a major loss of income if a vehicle is damaged. Comprehensive coverage will protect against non-accident issues like theft, vandalism or damage from natural disasters.  

Related: How much car insurance do you really need? 

Which kinds of businesses need fleet insurance? 

Fleet insurance is designed for businesses that rely on the use of multiple vehicles. Delivery services, logistics companies, and freight operators benefit from fleet insurance to safeguard their vans, trucks, and cargo during daily operations.  

Similarly, construction companies with diverse fleets of trucks and specialized construction vehicles use fleet insurance.  

And taxi, rideshare, or chauffeur services will also be well aligned with fleet insurance to cover multiple drivers and vehicles under a single policy.  

How can you save money on fleet insurance? 

Saving money on fleet insurance can be done by making a few strategic choices.  

One route here is to opt for a policy that uses telematics, where premiums are calculated based on real-time data like mileage, driving habits and other metrics. This approach rewards responsible driving and can help reduce insurance costs for fleets with lower vehicle usage. 

Another option is to choose a named driver policy instead of an any-driver policy. By insuring only specific, named drivers, you can lower your premiums significantly, although it may require more organization as well as limit your flexibility as an employer.  

Of course, it’s important to ensure all drivers have good driving records, whether you opt for telematics or not. Parking vehicles in safe, secure locations can also help to reduce the risk of theft or vandalism and potentially lead to lower premiums.  

And like taking out any kind of policy, shopping around for the best fleet insurance policy available can be a huge help in cutting your insurance costs effectively.