Transporting vehicles is not the same as moving regular freight.
A single load of cars, trucks, or specialty vehicles can easily represent hundreds of thousands or even millions of dollars in value.
When you consider that a standard car carrier can hold 8-10 vehicles, with each vehicle worth anywhere from $30,000 to $200,000 or more, the total value being transported can quickly exceed $1 million.
For transporters specializing in luxury or exotic vehicles, a single trailer might carry $2-3 million worth of automobiles. One accident, theft, or fire could cause catastrophic losses for both the client and the hauler. Without the right protection, even an established business with decades of successful operation and a stellar reputation could collapse overnight from a single uninsured incident.
This blog will walk you through what auto transport insurance really means in Québec, the main types of coverage, the legal requirements that haulers must follow, real-life scenarios where insurance saves businesses, and how Qubit Insurance- an AMF-licensed brokerage in Montréal- helps clients secure reliable and compliant protection.
Understanding Auto Transport Insurance
Auto transport insurance is a specialized form of commercial insurance tailored for businesses that move vehicles rather than general goods. It goes beyond standard fleet insurance because it must address not only the risks of operating trucks but also the enormous responsibility of carrying clients' vehicles.
This type of insurance recognizes that auto transporters face unique challenges: they're handling finished products that can be damaged by minor incidents, they're responsible for items that depreciate with any damage, and they're managing cargo that's often individually owned and emotionally valuable to customers.
Here's how it works in Québec:
Public layer (SAAQ)
Covers all bodily injuries in a no-fault system. No lawsuits are allowed for personal injury claims, since the SAAQ provides compensation for medical expenses, rehabilitation, and income replacement directly.
This system eliminates the lengthy legal battles often seen in other jurisdictions and ensures injured parties receive prompt assistance. The SAAQ coverage is comprehensive, including immediate medical care, long-term rehabilitation services, income replacement benefits calculated on actual earnings, death benefits for families, and permanent impairment compensation.
Private layer
Businesses must buy civil liability insurance for property damage and third-party claims. Additional optional coverages protect the hauler's trucks, trailers, and the client's vehicles being transported.
Private insurers in Québec have developed sophisticated underwriting models that account for the province's unique weather conditions, road infrastructure, and regulatory environment. These insurers offer various deductible options, coverage limits, and premium payment plans to accommodate businesses of all sizes.
This hybrid system ensures people are protected through the public plan while businesses still remain financially responsible for property, cargo, and liability exposures through private insurers.
Read More - What is Freight Insurance?
5 Main Types of Auto Transport Coverages
Auto transport insurance is not one policy; it's a bundle of coverages designed to protect against multiple risks. Let's look at the most important types in depth:
1. Civil Liability Insurance
This coverage pays when your truck or trailer causes damage to someone else's property or injures another party. In Québec, the minimum legal requirement is $50,000, but in practice, contracts with dealerships, auction houses, or cross-border clients often require limits in the millions.
Most commercial contracts specify minimum liability coverage of $1 million, with many requiring $2 million or more. High-end dealerships and manufacturers may demand $5 million in coverage. This coverage is essential because it protects your business assets from lawsuits and claims that could otherwise force you into bankruptcy.
Example: Your truck skids in icy conditions and collides with a parked semi, causing $250,000 in damage. Liability insurance pays for those losses. Without it, you would face bankruptcy. The coverage would also handle legal defense costs if the other party sues, expert witness fees, court costs, and settlement negotiations.
2. Cargo Insurance
Cargo insurance is essential for auto haulers. It protects the vehicles you carry against damage, theft, vandalism, or loss during transit. Since a single trailer can carry up to 10 vehicles, the exposure can exceed $1M in just one trip.
Modern auto transport trailers are engineering marvels designed to maximize capacity, with some specialized units able to carry 12 or more vehicles. This means your cargo exposure could regularly exceed $1 million, especially when transporting new models, luxury vehicles, or specialty cars.
Example: A rest-stop theft results in the loss of several new cars worth $600,000. Cargo insurance compensates your client, protecting your reputation and financial survival. The insurance may also cover the costs of investigating the theft, working with law enforcement, and potentially offering rewards for information leading to the recovery of the vehicles.
3. Comprehensive Coverage
Covers your own trucks and trailers for non-collision events such as fire, theft, vandalism, flooding, hail, or windstorms. With extreme weather events increasing across Canada, this coverage has become more critical than ever.
Climate change has led to more frequent and severe weather events in Québec, from ice storms that can cripple operations for days to summer hailstorms that can damage entire fleets. Comprehensive coverage ensures these uncontrollable events don't destroy your business.
Example: A flood in a storage yard damages several trucks. Comprehensive insurance pays for repairs or replacements. This might include water damage to engines, electrical systems, hydraulic lifts, and specialized loading equipment.
4. Collision Coverage
Pays for damage to your own vehicles if they are involved in an accident. Even if you are at fault, collision coverage ensures you can repair or replace your trucks and get back on the road quickly. This is particularly important in the auto transport industry, where specialized equipment can cost hundreds of thousands of dollars and may take months to replace if ordered new.
Example: Your hauler overturns on a rural highway. Collision coverage pays for the repair of the hauler itself, not just third-party damages. This includes the truck tractor, the specialized trailer, hydraulic systems, ramps, and any other equipment damaged in the accident. Coverage typically also includes towing costs, which can be substantial for large commercial vehicles.
5. Endorsements and Specialized Add-ons
Beyond the basics, insurers offer endorsements to tailor protection:
Trailer interchange coverage: Needed when hauling trailers you don't own. Many transport companies share equipment or lease trailers during busy periods. This coverage protects you if a non-owned trailer is damaged while in your possession.
Garage liability insurance: Covers vehicles stored temporarily in your facility before or after transport. This can also include protection for customer vehicles while they're on your property, whether in a yard, garage, or loading area.
Downtime and rental reimbursement: Compensates lost income or covers replacement vehicle rentals while your equipment is out of service. In the transport industry, every day a truck is out of service means lost revenue and potentially damaged client relationships.
These layers together form a safety net that ensures both your assets and your client's vehicles are fully protected.
Real-World Scenarios Where Insurance Protects
Insurance may feel abstract until you see what happens in practice. Here are some examples:
1. Highway Collision
A hauler transporting luxury vehicles is involved in a collision caused by another truck. Cargo coverage compensates the dealership for its cars, while liability coverage handles third-party damages. The total claim might exceed $500,000, including vehicle damages, legal costs, and business interruption losses. Without proper insurance, this single incident could bankrupt even a well-established company.
2. Cross-Border Check
A Québec hauler heading into Vermont is asked for proof of MCS-90 coverage. Without it, they would be fined and turned back. With it, they pass inspection without delays. The fines for non-compliance can exceed $5,000, and repeated violations can result in permanent bans from U.S. operations, cutting off a major revenue source.
3. Warehouse Damage
Several vehicles stored at a yard are destroyed in a sudden hailstorm. Comprehensive insurance pays for client losses, saving the transporter's contract. Québec's weather can be severe and unpredictable, with hailstorms capable of causing millions in damage within minutes. Insurance provides the financial protection needed to survive these natural disasters.
4. Theft at a Rest Stop
Overnight, a loaded trailer is stolen. Cargo insurance covers the vehicles, protecting the hauler's reputation and financial standing. Professional theft rings target auto transporters because of the high value and relative ease of reselling stolen vehicles. Insurance ensures you're not personally liable for these criminal acts.
These real-world cases demonstrate why general trucking insurance is not enough for auto haulers.
Cost Analysis of Auto Transport Insurance
How much does it cost? There's no single number, but we can break it down:
Type of vehicles transported
Luxury, exotic, or heavy trucks increase premiums. Standard passenger cars cost less. A transporter hauling only standard vehicles might pay 30-50% less than one handling luxury or exotic cars. The insurance company considers the average value of vehicles transported, the difficulty of repairs, and the likelihood of claims when setting rates.
Routes and distances
Cross-border or long-haul trips are riskier and more expensive to insure. Local operations within a 100km radius typically have the lowest rates. Interprovincial routes add 15-25% to premiums, while international routes can add 30-50% or more due to increased regulatory requirements and exposure to different legal systems.
Fleet size and revenue
More vehicles and higher business volume equal higher exposure. However, larger fleets often qualify for volume discounts and may have better safety programs that reduce per-vehicle costs. Fleet Insurance companies also consider fleet utilization rates, maintenance programs, and driver training when calculating premiums. A well-maintained fleets with safety certifications often negotiate better terms with insurers, leveraging their proactive risk controls.
Claims history
Clean records lower commercial insurance costs; frequent claims raise them. A single major claim can increase premiums by 20-50%, while multiple claims might double or triple your costs. Transport Insurance companies typically look at five years of claims history, with more recent claims having a greater impact on rates.
Risk management practices
Training programs, anti-theft tech, and compliance systems can earn discounts. Companies with formal safety programs, driver training initiatives, GPS tracking, and security protocols often receive premium reductions of 10-25%. These investments in safety typically pay for themselves through reduced commercial insurance costs and fewer claims.
In Québec, premiums often start at a few thousand dollars per year for small operators, but large fleets or those handling high-value cargo may pay tens of thousands annually.
While that seems high, compare it to potential losses: a single accident could cost hundreds of thousands of dollars. Insurance is the difference between survival and bankruptcy.
How Claims Are Processed
When an incident occurs, quick and accurate claim handling is essential to avoid business disruption. Insurers generally require:
Accident report with all details of the incident.
This should include date, time, location, weather conditions, road conditions, names of all parties involved, witness information, and a detailed description of what happened. The more complete your initial report, the smoother the claims process will be.
Photographs of the scene and damage.
Take pictures from multiple angles showing overall scene context, specific damage to all vehicles, road conditions, weather, traffic signs, and any contributing factors. Modern smartphones make this easy, but remember to take more photos than you think you need.
Bill of lading or cargo manifest showing the condition and value of vehicles before transport.
This document is crucial for cargo claims as it establishes what you were carrying and its pre-transport condition. Always conduct thorough pre-trip inspections and document any existing damage to avoid disputes later.
Driver statements and police reports, when applicable.
Get written statements while memories are fresh. If police attend the scene, obtain the report number and the officer's information. Some jurisdictions allow online access to police reports, which can speed up the claims process.
At Qubit Insurance, our brokers don't just sell policies. We help clients through the entire claims process from documenting evidence to negotiating with insurers, ensuring claims are settled fairly and quickly, so you can return to operations with minimal downtime.
Choosing the Right Auto Transport Insurance
Selecting the right insurance policy for auto transport requires careful analysis of several factors:
Type and value of vehicles hauled
Exotic or luxury cars require higher cargo limits. If you're transporting vehicles worth $100,000 or more each, you need cargo coverage that reflects these values. Don't underestimate your coverage needs; it's better to have too much insurance than too little.
Routes and distances
Local operations may only need basic coverage, while U.S. trips require MCS-90 endorsements. Consider where you operate now and where you might expand in the future. It's easier to have coverage in place before you need it than to scramble for insurance when a new opportunity arises.
Business size
Large fleets face higher exposure and need broader protection. But even single-truck operators need comprehensive coverage because one claim could wipe out a small business. Consider your total exposure: the value of your equipment, the vehicles you transport, and your potential liability to others.
Exclusions
Know what isn't covered (e.g., normal wear and tear, voluntary liabilities). Read your policy carefully and ask questions about anything you don't understand. Common exclusions include mechanical breakdown, gradual deterioration, intentional damage, and operation outside covered territories.
Conclusion
Auto transport insurance is not a luxury; it's essential for anyone in the business of moving vehicles. Québec's hybrid system ensures people are covered through SAAQ, but property damage, cargo risks, and liability exposures must be addressed privately.
With Qubit Insurance, you gain a partner that understands your risks, ensures compliance with Québec and U.S. laws, and provides coverage designed specifically for auto haulers.
