Correct as of September 2023.
What is business car insurance?
Business car insurance could cover you if you use your car for any work-related purposes, over and above commuting. If you’re visiting clients, travelling to meetings or moving between sites, you’ll need business car insurance.
Do I need business car insurance?
If you use your car for any work purposes other than commuting between your home and your place of business, then yes, you’ll need business car insurance.
When you take out car insurance, you’ll need to choose between three types of cover depending on what you use your car for:
- Social, domestic and pleasure (SDP) – covers you for driving to the shops or visiting friends.
- SDP and commuting (SDP & C) – also covers you for commuting to and from work.
- SDP & C and business use – covers you for driving for domestic, leisure and social reasons, commuting and using your car at work.
If you don’t have business car insurance in place and you have an accident while driving for work, you won’t be able to make a claim. If your car insurance provider finds you’ve given false or misleading details about how you’re using your car, whether intentionally or not, it could invalidate your policy.
As standard car insurance won’t usually cover you for driving at work, you could also be committing a criminal offence by driving without insurance.
What types of company car insurance are there?
Business car insurance falls into three classes of use – all three also cover social, domestic and pleasure use.
Class 1 business insurance
Covers you for driving between multiple places of work or occasional travel to meet clients. Class 1 business insurance typically includes people like care workers who drive to visit patients.
It wouldn’t cover you for deliveries or door-to-door sales. It may cover your spouse but check your policy to be sure.
Class 2 business insurance
Offers the same cover as class 1 but includes a named driver, usually a co-worker. Most insurance providers specify that the policyholder and named driver must work for the same business.
As with class 1 business insurance, deliveries and door-to-door selling aren’t covered.
Class 3 business insurance
Also known as ‘commercial travelling’. This could be a good option if you rack up a lot of miles as part of your job – for example, if you’re a salesman. It covers the delivery of samples, but not commercial merchandise.
This is the most expensive insurance class, as high-mileage drivers are considered at greater risk of an accident and more likely to make a claim. But be aware that class 3 won’t cover you if you use your car as a taxi or to make deliveries.
What’s the difference between business car insurance and commercial car insurance?
Business car insurance covers you when you use your car at work, to visit clients or travel between different offices or work sites.
If driving is an integral part of your job, you’ll need commercial car or vehicle insurance. Like regular vehicle insurance, it offers three levels of cover – third-party, third-party, fire and theft and comprehensive insurance.
You’ll need commercial vehicle insurance if:
What does business car insurance cover?
Insurance for business vehicles offers specialist cover that gives more protection than standard insurance. Business car insurance could cover you if you use your car to:
- Travel between different sites or offices
- Visit clients on a regular basis
- Drive to off-site meetings
- Drive other employees around on business duties
- Visit customers
- Drive to the bank for work reasons
- Use your car to get to training, conferences or exhibitions.
Most business car insurance providers also offer the option of adding extras to your policy. For example, you might want to consider:
- Driving abroad cover – covers you driving in most European countries.
- Motor legal protection – could help cover the costs of legal fees related to a claim by you or a third party.
- Courtesy car cover – provides a replacement vehicle while yours is being repaired, so business won’t be disrupted.
- Personal accident cover – a compensation pay-out if you or a passenger is injured or killed in a road accident.
Think carefully about any extra features you may want to add, as they can push up the price of your business car insurance policy.
What isn’t covered by car insurance for business use?
Business car insurance won’t cover you for certain jobs, for example:
- Making regular deliveries of goods – if you’re offering delivery services to other companies for hire or rent, you’ll need commercial van insurance
- Working as a delivery driver – you’ll need hire and reward or food delivery car insurance.
- Working as a taxi driver – compare taxi insurance
- Working as a driving instructor – you’ll need commercial vehicle insurance.
How much is business car insurance?
The cost of your business car insurance will depend on:
- 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.
- How many miles you estimate you drive for work and how many for social, domestic or leisure activities.
- Your age, your no-claims discount and your driving history.
- What you do for a living and how you’ll be using your car at work.
- Where you live and where you travel for work.
- The age and driving history of any other named drivers on your policy.
How can I get cheaper business car insurance?
There are a few ways you could cut the cost of your business car insurance:
- Increasing your voluntary excess – just make sure you can afford it.
- Improving your car’s security – for example, keep your car in a locked garage, or install an immobiliser.
- If your business has three or more cars, it might be eligible for fleet insurance.
- Paying your premium upfront is often cheaper than monthly instalments.
- Proving you’re a safe driver with a black box insurance policy.
- Shopping around and comparing quotes.
It’s also worth discussing with your employer whether you can be reimbursed for the cost of business car insurance.
What do I need to get a business car insurance quote?
To get a business car insurance quote, you’ll need to tell us a few details about:
- Your car – you’ll need to have your registration number to buy a policy. But you can get a quote without it if you know your car’s make, model and age.
- How you use your car – including how many miles you drive a year for work purposes.
- Your no-claims discount (NCD) – if yours is still valid.
- Your driving history – any driving convictions, insurance claims, or accidents.
Any additional drivers you want to add to the policy.
Our online comparison service can help simplify your search and provide you with a range of competitive quotes that suit your needs.
Once you have your quote, you can look at where you can make savings on your business car insurance. The great thing about our comparison service is that it’s easy to try different options to see how they affect your company car insurance quote.
What our expert says...
“Business car insurance is a relatively expensive cover designed for those who do a great deal of work travel. Tally up a few typical months of your business travel and think very carefully about whether it’s the right cover for you. If it is, use that tally to work out which class of use fits best – whether you’re a class 1 type heading to the occasional client meeting or, at the other end of the scale, a class 3 type who spends a big chunk of their working week on the road.”
- Kate Hughes, Insurance expert
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Frequently asked questions
Do I need business car insurance if I have a company car?
You probably won’t need business car insurance if you have a company car. Your employer or the leasing company should provide your company car insurance, but you’ll need to check.
If your company car is out of action, for example, having its regular service, and you use your own vehicle or your partner’s for work, then you’ll need business car insurance.
Is my spouse covered to drive my car?
Does a nanny need business car insurance?
If you work as a nanny and use your own car to drive the children to school and back, and take them to after-school activities, you’ll need business car insurance.
You may not need business car insurance if you only work for one family, and only use your car to drive to your employer’s house and home again.
Always check with your insurance provider if you’re not sure.
Can I claim tax reimbursement on car insurance if I’m self-employed?
If you’re self-employed, you can claim for your car insurance if you 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).
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 car for work, you should be able to claim reimbursement for the miles you’ve driven for work. For the first 10,000 miles driven, you can claim back 45p per mile under HMRC’s Mileage Allowance Payments (MAPs) scheme. For any miles driven over the 10,000 threshold, you’ll get 25p per mile.
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 28 days.
Before you take out a temporary policy, it’s worth checking if your usual car insurance provider can add temporary business insurance to your policy. This could be helpful and less hassle if you’re just going on a short business trip.
Will my standard policy no-claims discount be affected if I claim on business car insurance?
Making a claim on your business car insurance shouldn’t affect the no-claims discount on your standard car insurance. But you’ll still need to notify your insurance provider.
Why is business car insurance more expensive than standard car insurance?
Business car insurance can cost more than regular insurance because there are higher risk factors for providers to consider. Depending on the job you do, these could include:
- More time on the roads, especially in peak, rush-hour traffic
- More miles on the clock if you travel long distances for work
- Driving on unfamiliar roads
- Extra equipment that you carry for work.
These factors can put you at a higher risk of being involved in an accident. Ultimately, the cost of covering those extra risks will be reflected in the price of your premium.
What happens if I use my car for work without business car insurance?
If you use your car for work-related activities, and you don’t have the right business car insurance, you won’t be covered, so you’re essentially an uninsured driver.
Driving without proper insurance is illegal, and the penalties if you’re caught are severe. You could be disqualified from driving, and even lose your job – it’s just not worth taking the risk.