Business car insurance

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^[1]Correct as of September 2024.

What is business car insurance?

Business car insurance could cover you if you use your car for any work-related purposes. If you’re simply using your car to commute to your permanent workplace each day, then you could be covered by a standard car insurance policy. But if you’re visiting clients, travelling to meetings or moving between job sites, 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 your regular workplace.
SDP & C and business use – covers you for driving for domestic, leisure and social reasons, commuting and using your car at work.

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. For example, you’ll need business car insurance if you use your car to:

Transport goods or business equipment
Run work-related errands, such driving to the bank or post office
Drive between different workplaces or job sites
Drive to business meetings or to visit clients.

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, it could invalidate your policy. That’s true regardless of whether it was intentional.

Also, 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

What it covers:
Driving between multiple places of work or occasional travel to meet clients. For example, it could cover care workers who drive to visit patients.

What it doesn’t:
It wouldn’t cover you for deliveries or door-to-door sales.

Class 2

What it covers:
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.

What it doesn’t:
As with class 1 business insurance, deliveries and door-to-door selling aren’t covered.

Class 3

What it covers:
Also known as ‘commercial travelling’, it could cover you if you drive long distances and rack up a lot of miles as part of your job. For example, if you work in sales.

What it doesn’t:
Class 3 won’t cover you if you use your car as a taxi or to make deliveries. It covers the delivery of samples, but not commercial merchandise.

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:

You’re a taxi driver
You’re a driving instructor
You drive a truck or delivery van or you have a fleet of business vans.

What does business car insurance cover?

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 colleagues or business contacts around
Visit customers and clients
Run work errands, such as driving to the bank
Go to training, conferences or exhibitions.

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 – for that 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.

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 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.

How much is business car insurance?

The cost of business car insurance depends on several factors, including the class of use you need. Class 3 is typically the most expensive insurance class, as high-mileage drivers are considered at greater risk of an accident and more likely to make a claim.

The cost of your business car insurance will also 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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Who pays for business car insurance?

Business car insurance is usually paid for by the business.

If you drive a company car – your employer will normally arrange and pay for your business car cover. That’s because they own the vehicle you’ll be driving.

Make sure you check the terms with your employer, though. Be aware that if you use your company car in your personal life, it’s considered a job perk and you’ll have to pay benefit-in-kind tax through your employer.

If you’re required to use your own car for business reasons, speak to your employer about claiming for additional expenses like adding business use to your policy and mileage allowances.

If you’re self-employed – you’ll need to arrange and pay the premiums for your own business car insurance policy. You can claim your business car insurance policy as a business expense and deduct the cost from your total payable tax.

You’ll need to keep a record of the miles you drive for business reasons. You won’t be able to claim for journeys you take for social and domestic reasons.

Find out more about car insurance for the self-employed.

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.
Building up your no-claims discount.
Choosing a car in a low insurance group when it’s time to upgrade.
Shopping around and comparing quotes.

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 isn’t a one-size-fits-all policy – the cost can vary depending on how you use your car for work and the mileage involved. Tally up a few typical months of your business travel and use that 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

How much does it cost to add business use to car insurance in the UK?

That depends on what class of business use you need to add to your policy, and other considerations, including:

How many miles you’ll cover on business journeys
Where you’ll be travelling for work
What kind of work you do
If you’ll be carrying goods or equipment.

Do I need business car insurance if I have a company car?

You probably won’t need to arrange your own 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?

Some business car insurance policies can also cover your spouse for domestic, social and pleasure use.

Check with your business car insurance provider whether your policy covers any drivers, or if your spouse needs to be added as a named driver.

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 your car insurance as a business expense 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).

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. But always check with your accountant first before making decisions on tax.

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.

You can earn a certain amount of Mileage Allowance Payments (MAPs) tax free. For the first 10,000 miles driven, you can get up to 45p per mile under HMRC’s (MAPs) scheme, without paying any tax on it. For any miles driven over the 10,000 threshold, you’ll get 25p per mile tax free.

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 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 is unlikely to 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 or goods 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.