Business car insurance

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What is business car insurance?

Business car insurance covers you if you use your car for any work-related purposes, apart from commuting. It’s often more expensive than standard car insurance because you’re seen as more of a risk to insurance providers. That’s because driving for work can involve you covering more miles at busier times and on unfamiliar roads. This means you’re more likely to make a claim on your insurance.

Do I need business car insurance? 

If you’re using your car for any work purposes other than commuting to and from your home and your place of business, then yes, you’ll need business car insurance. When you take out car insurance, you choose between three options, depending on what you intend to 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 out that you’ve given false or misleading details about how you’re using your car, whether intentionally or not, it could invalidate your policy. And because 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 does business car insurance cover me for?

Business car insurance can 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

What isn’t covered by business car insurance? 

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 taxi driver - compare taxi insurance
  • Working as a driving instructor.

What types of business car insurance are there?

Business car insurance falls into three classes of use – all three also cover social, domestic and leisure use.

Class 1

Covers you for driving between multiple places of work or occasional travel to meet clients. Class 1 insurance typically includes people such as 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

Offers the same cover as class 1 but includes a named driver, usually a co-worker. Most insurance providers specify that the policy holder and named driver must work for the same business. As with class 1, deliveries and door-to-door selling aren't covered.

Class 3

Could be the right option if you rack up lots of miles as part of your job – for example, if you're a salesman. It covers the delivering 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.

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^^Correct as of June, 2022.

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How much does business car insurance cost? 

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.
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What do I need to get a quote?

Shopping around for cheap business car insurance couldn't be easier. Simply start a quote by telling us 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).
  • Your driving history – any driving convictions, insurance claims or accidents.
  • Any additional drivers you want to add to the policy.

Our online comparison service will do all the hard work for you 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 car insurance. The great thing about our comparison service is that it’s easy to try different options to see how they affect your quote.

Author image Kate Hughes

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

Frequently asked questions

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:

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.

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

If you’re self-employed, you’ll be able to claim certain travel costs as business expenses when you complete your self-assessment tax return. This includes:

  • Your car or vehicle insurance if you use your vehicle for work
  • Repairs and servicing
  • Parking fees
  • Fuel used on work journeys (but not the fuel you use to get to and from work or for social and domestic use). 

It’s important to keep any receipts for business expenses you’ll be claiming for 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 for 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, it’s straightforward to get temporary car insurance.

You can get cover in under 15 minutes if you suddenly need to use your car for business. And you can get cover for periods from an hour up to 28 days.

But before you get temporary cover, it’s worth checking with your car insurance provider whether you can add temporary business insurance to your policy – some providers offer this as an option. This could be helpful 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?

If you make a claim on your business car insurance, you’ll need to notify your insurance provider, but it shouldn’t affect the no claims discount on your standard car insurance policy.

How can I reduce the cost of my business car insurance?

There’s a few ways you could cut the cost of your business car insurance: 

  • Increase your voluntary excess – just make sure you can afford it
  • Improve 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 instalments
  • Prove you're a safe driver with a black box insurance policy
  • Compare quotes with Compare the Market

It's worth discussing with your employer whether you can be reimbursed for the cost of business car insurance.

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