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Business car insurance keeps you covered when using your vehicle for business purposes. Personal car insurance policies won’t necessarily pay out if incidents occur in everyday work situations.
Find out when you need business car insurance, what it covers, and the various policies available below.
When do I need business car insurance?
If you drive on UK roads, you need to have car insurance by law. Business car insurance might be needed if you use your vehicle for work.
If you only commute to and from one place of work, you should be able to use your standard car insurance if you have a social and commuting policy. Check your policy in detail so you have the cover you need.
Work-related activities that may require business car insurance include:
- driving to work sites or meetings at different locations
- running business errands during working hours
- door-to-door selling
- moving stock
- making deliveries or collections
- driving clients or business associates
- letting colleagues drive your car
If you use your car for work in any of these ways, you may need a business car insurance policy.
Meanwhile, if you use your vehicle primarily for business purposes, such as a taxi or lorry, you will need commercial vehicle insurance.
» MORE: Do I need business insurance?
What does business car insurance cover?
As with personal car insurance, there are three main types of cover you can buy:
- Third party only insurance (TPO). Third party car insurance is the legal minimum requirement by UK law, and covers costs associated with injuries and damage to others (including vehicles and property) caused by your driving. Damage to you and your own car is not covered.
- Third party, fire and theft insurance (TPFT). This includes compensation for a third party in the event of injury or property damage, but also covers your vehicle if it is stolen, damaged or destroyed in a fire.
- Fully comprehensive. Comprehensive car insurance offers full cover, including if your car is stolen, damaged or destroyed in an accident or fire. It can also cover personal injury after a collision and damage to or theft of your vehicle contents. This on top of the third party compensation included in TPO and TPFT.
Classes of business car insurance
Class 1 business car insurance
On top of commuting and day-to-day personal use, Class 1 business car insurance covers driving to multiple places of work, including meetings and job sites.
Your spouse or partner may also be covered.
Class 1 business car insurance could be appropriate for most basic business car use. This could be sales managers visiting clients, cleaners visiting different households, or estate agents going from property to property.
However, Class 1 business car insurance does not cover door-to-door selling or making deliveries.
Class 2 business car insurance
The major difference between Class 1 and Class 2 business car insurance is the latter allows an additional named driver who is not your spouse.
For example, if you are a small business owner and need an employee to run a business errand in your car, you should opt for Class 2 insurance.
As with Class 1 business car insurance, Class 2 business car insurance doesn’t cover door-to-door selling and deliveries.
Class 3 business car insurance
This offers the most cover and is the most expensive of the three classes.
Typically, it is used by door-to-door salespeople driving long distances with a small amount of products. This differs from making deliveries, where you need commercial car or courier insurance.
It also comes with all the features of Class 1 and Class 2 business car insurance.
Other types of business car insurance
Alongside the three main classes of business car insurance are several options for more specific business activities.
Commercial car insurance
You need commercial vehicle insurance if you first and foremost use it for business purposes rather than basic transport for yourself. This could be a taxi, minibus, van, limousine, or truck.
This kind of cover would be required by taxi drivers, Uber drivers, driving instructors, and chauffeurs. There are specific commercial insurance policies for each of these professions.
A commercial vehicle insurance broker can help you to get the specialist insurance you need.
Delivery and courier insurance
Another form of commercial car insurance is courier insurance, be it for a car, van, moped, or motorcycle.
If you make deliveries of food or other goods, you need a policy that includes carriage of goods for hire and reward cover.
Therefore, if you are a Deliveroo or Just Eat driver, or deal with furniture removal, you will need to look into some form of courier or delivery driver insurance.
Business breakdown cover
Not every business car insurance policy will come with business breakdown cover. To get your vehicle fixed and back on the road as soon as possible you can take out a separate breakdown policy.
Temporary business car insurance
If you only need business car insurance for a short time – for example, driving your car or someone else’s for a one-off business trip – you can get temporary business car insurance. This tends to cover periods from as short as one hour up to 30 days.
Company car insurance
If an employee drives a company car, which is owned or leased by their employer, it is the employer’s responsibility to insure the vehicle.
How much is business car insurance?
Given the sheer number of different types and levels of business car insurance, costs can vary greatly.
Consistent factors across most types of business car insurance that help decide your premium include:
- your age
- how much you use your car
- the industry you work in
- if you are carrying any goods or equipment
- the make and model of your car
- where your car is parked overnight
- crime and safety in your area
- the class of business insurance you require
- the level of cover you opt for
- the excess you choose (the sum you pay towards any claim)
- your claims history
Shopping around and comparing insurers can help you find the right level of cover at the lowest price.
» MORE: Why is car insurance so expensive?
How can I get cheaper business car insurance?
To reduce your premium, make sure you:
- Get the right level of cover: You don’t want your car to be underinsured, but you also don’t want to waste money on overinsuring your vehicle.
- Carefully consider the model of car before you buy: Engine size and fuel efficiency can affect your premium.
- Park your car in a safe place: Park off-street or in a secure garage if you can.
- Install extra security devices: Consider alarms, immobilisers and steering wheel locks.
- Pay your premium up front: If you can afford it, pay annually rather than by monthly instalments. This can bring down the overall cost.
- Opt for black box, or telematics, insurance: This is where your insurer monitors your driving habits and rewards safe or efficient driving with a reduced premium.
» MORE: How to get cheaper car insurance
Business Car Insurance – FAQs
Business Car Insurance – FAQs
No. The simple way to differentiate is that business car insurance is for vehicles used for transport between places of work, while commercial vehicle insurance is needed where the vehicle is used as an essential and integral part of the business. This might be as a taxi or delivery truck.
It depends on how you use your vehicle. If you use it for business purposes, such as to do more than a commute to a place of work, then you will likely need business car insurance.
Image source: Getty Images
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