Business car insurance

Business cover to keep you moving

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What is business car insurance?

Business car insurance covers work-related use of your car beyond your usual daily commute from your home to your office or workplace.

It’s designed for people who drive as part of their job – for example, visiting clients, travelling between sites or carrying work equipment.

Business car insurance works in the same way as standard car insurance, but cover is extended to include the additional risks linked to work-related driving.

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Do I need business car insurance?

You need business car insurance if you’re:

  • Transporting goods or business equipment

  • Driving between multiple work sites

  • Driving to business meetings or to visit clients

  • Running work-related errands, such as driving to the bank or post office.

Standard car insurance won’t usually cover you for these types of journeys. And if you drive without proper cover, you could invalidate your policy and any car insurance claim you make could be rejected.

Bear in mind...

If you’re not correctly insured, you can be fined £300 and be given six points on your licence.

If the case goes to court, you could get an unlimited fine, a driving ban and your car could be car seized and destroyed.

What class of business car insurance do I need?

Class 1

  • Class 1 business car insurance covers driving between multiple places of work or occasional travel to meet clients.

    For example, this could include care workers who drive to visit patients.

Class 2

  • Class 2 business car insurance offers the same cover as class 1 but includes the option to add a named driver, usually a co-worker.

    Most insurance providers specify that the policyholder and named driver must work for the same business.

Class 3

  • If you use your car extensively for work, you may need Class 3 business car insurance.

    While this can be the option to choose if you use your car to earn your living, it won't cover some occupations, such as taxi drivers, who will instead need specialist insurance.

What’s the difference between business and commercial car insurance?

Business car insurance offers cover if you drive for work-related purposes.

Commercial insurance offers cover if driving is an integral part of your job. In other words, you can’t do your work without your car. So you’ll need commercial vehicle insurance if:

What does business car insurance cover?

Typically covered

  • Travel between different sites or offices

  • Visiting clients on a regular basis

  • Driving to off-site meetings

  • Driving around colleagues or business contacts

  • Visiting customers and clients

  • Running work errands, such as driving to the bank

  • Travel to training, conferences or exhibitions.

Not typically covered

  • Making regular deliveries of goods

  • Working as a delivery driver

  • Working as a taxi driver – monthly premiums for taxi drivers typically cost less than £179.892

  • Working as a driving instructor.

How much is business car insurance?

The cost of business use car insurance depends on a range of factors, including...

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The class of business car insurance you need

Choose between Class 1, Class 2 or Class 3 depending on how comprehensive you need your cover to be.

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What type of car you’re driving

Insurance providers will look at the make and model of your car and what car insurance group it’s in. Engine size can have significant impacts on your premium.

For example, a car with a 1.5-1.9 litre engine typically costs less than £558 per year. However, for larger, more powerful vehicles with a 2.5-2.9 litre engine, that could cost nearer £7093.

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How many miles you drive

Higher mileage will usually increase the cost of your cover.

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Your age

Younger, less experienced drivers typically pay more for business car insurance.

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Your no-claims discount and driving history

If you've had a motoring conviction, typical premiums rise from £588 up to £7723.

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What you do for a living

What you do for work and how you’ll be using your car.

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Where you live

Along with where you travel for work.

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Details about any named drivers

The age and driving history of any named drivers on your policy.

Is business car insurance more expensive than standard car insurance?

Business car insurance can cost more than standard car insurance because insurers may consider you to have a higher risk of being involved in an accident.

Depending on the job you do, you could be:

  • Spending more time driving, especially in peak, rush-hour traffic

  • Clocking up a high mileage if you travel long distances for work

  • Driving on unfamiliar roads

  • Carrying extra equipment or goods for work.

The cost of covering these extra risks will be reflected in your business car insurance premium.

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How can I get cheap business car insurance?

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Increase your voluntary excess

The voluntary excess is an amount you agree to pay if you make a claim. Insurers also set an additional compulsory access.

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Improve your car’s security

Install an immobiliser or keep your car on a driveway.

According to our data, drivers who are able to park their car on a driveway typically pay less than £333 per year, compared with £6913 for those who park on the street.

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Pay annually

You typically pay interest on monthly instalments, making them more expensive overall.

Drivers who pay annually typically spend around £509 per year, whereas those who pay in instalments typically spend £7343.

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Build up your no-claims discount

If you go a full year without making a claim on your car insurance, you’ll earn a no-claims discount (NCD). The bigger your NCD, the more money you could save on your premium.

For example, if you have 1-3 years NCD, you could pay around £822. However, if your NCD is 10 years or more, you could pay closer to £3733.

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Shop around and compare business car insurance quotes

Customers could save up to £485 per year1 when they compare car insurance with us. Shop around and see if you can save.

Find more top tips in our guide to getting cheaper car insurance.

Amy Rootham

What our expert says...

“Many drivers don’t realise that if they use their own car for work beyond their daily commute – such as going to client meetings or running company errands – they need to have business car insurance.

“If you drive without the proper cover, it can invalidate your insurance and leave you personally liable for costs.”

Amy Rootham, Insurance expert

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FAQs

Does a nanny need business car insurance?

Yes, if you’re a nanny and use your own car to drive the children to school and back, or to after-school activities, you’ll need business car insurance.

You may not need business insurance for your car if you only work for one family and only use your car to drive to your employer’s house and home again.

Check with your insurance provider if you’re not sure.

Can I claim tax reimbursement on car insurance if I’m self-employed?

Yes, you can claim your car insurance as a business expense if you’re self-employed and use your car for work.

You’ll also be able to claim other travel costs as business expenses when you complete your self-assessment tax return, including:

  • Repairs and servicing

  • Parking fees

  • Fuel used on work journeys (but not the fuel you use for commuting, social and domestic use).

You won’t be able to claim for any non-work travel costs. So, you’ll need to keep a record of when you use your car for business.

It’s important to keep any receipts for business expenses you’ll be claiming on your tax return in case you’re asked to provide proof.

Do I need business car insurance to claim mileage?

Yes, you’ll need to have business car insurance to claim mileage.

If you’re employed by a company and you use your own car for work, you can normally claim reimbursement for the miles you’ve driven for work. However, the amount you can claim is up to your employer.

It could be paid as a set lump sum, a fixed rate per mile or as a reimbursement for the actual costs incurred.

Can I get temporary business car insurance?

Yes, some providers offer short-term car insurance with business usage. Temporary cover is typically available from one hour up to 30 days.

Before you take out a temporary policy, it’s worth checking if your usual car insurance provider can add temporary business use car insurance to your policy. This could be less hassle if you’re just going on a short business trip.

What optional cover can I add to business car insurance?

Most business car insurance providers also offer the option of adding extras to your policy, for an additional cost. You might want to consider:

But it’s worth weighing up whether you really need extra features. The more cover you have, the more you’re likely to pay for your business car insurance.

Who pays for business car insurance?

If you use your own car for business reasons, or you’re self-employed and use a car for your business, you’ll need to arrange and pay for business car insurance. Find out more about car insurance for the self-employed.

If you drive a company car, your employer will normally arrange and pay for your business car insurance.

But if you use your company car for personal reasons, it’s typically considered a job perk and you’ll have to pay benefit-in-kind tax through your employer.

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Amy Rootham
Reviewed 02 Jul 2026 by Amy Rootham Insurance expert

Amy helps make sure you get the best value when choosing insurance. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.

Methodology

1 Based on Online independent research by Consumer Intelligence during June 2026, 51% of customers could achieve this saving on their car insurance through Compare the Market.

2 51% of our customers were quoted less than £179.89 per month in April-June 2026 for their taxi insurance based on the monthly cost when paying for the policy in one annual payment, excluding any interest charged on instalment payments.

3 Based on 51% of customers who compared quotes for this type of policy in June 2026.