Personal car insurance covers both drivers and occupants in an insured vehicle. Depending on coverage, the car can be driven to and from work and for pleasure use, shopping for groceries, visiting or most anything a driver may want to do. The line is drawn, however, when the driver wants to earn money using the vehicle. Called commercial use, the nature of driving changes, and with that come changes to risk as assessed by insurance companies. For businesses large and small that offer driver training, insuring the vehicles used to teach G1 students requires commercial insurance issued for this purpose.
How Commercial Endorsements Work for Driving Instructors
The insurance companies who offer driving school car insurance are specialized. Not every insurer may offer coverage, but those that do may have special features offered to this industry, such as dedicated brokers and adjusters who specialize in the driver training industry.
Frequently, the commercial insurance portion is added to a policy in a section called an endorsement. Informally, this may also be called a rider or an add-on. Essentially, a driver training endorsement extends existing policy coverage to include the time that the vehicle is used as a driver training car. This means that, in terms of insurance, driver training is permitted and all drivers and occupants are covered.
Though individual premiums will vary with many factors, it is possible that this endorsement will add significantly to the insurance cost. A driving instructor could pay over three times the cost of regular insurance. Driving schools having many instructors who use their own vehicles for lessons may arrange fleet coverage, potentially saving money over what an individual might obtain.
Limits of Coverage
The Toronto Star investigated driver training schools in the Greater Toronto Area in 2013 and found that there were many driving schools side-stepping the Ministry of Transportation regulations for driver training. Drivers who were licensed to teach in-car and insured to drive for the school were moonlighting under their own company name. These drivers would offer in-car training while referring students to the parent company for in-class portions.
This creates several problems. First, the driver’s own business is usually not MTO-approved, regardless of the fact the driver is certified to teach the in-car lessons. Second, since this extra use of a vehicle may be occurring without informing the car insurance company providing the driving school endorsement, both students and instructors may not be covered while lessons are in progress. In the case of an accident, benefit claims could be denied if it is discovered that the vehicle was used outside of its intended coverage.
Obtaining a commercial endorsement for driver training is required, as is accurately informing the insurance company about how the vehicle is being used, particularly if usage changes.