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Business car insurance

Business car insurance

If you use your car for work, standard car insurance might not provide enough cover. Read our guide and find out if you need business car insurance.

David Edbrooke
Sub editor
4
minute read
posted 12 MARCH 2020

What is business car insurance?

Business car insurance is a type of car insurance that covers you if you use your car for work-related purposes, other than 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 you often cover more miles at busier times and on unfamiliar roads. This means you're more likely to make a claim.

What does business car insurance cover you 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 other employees around on business duties
  • Visit customers, for example to deliver samples
  • Drive to the bank for work reasons

What types of business car insurance are there?

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

  • Class 1. This covers you for driving between multiple places of work or occasional travel to meet clients. Class 1 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 also cover your spouse, but check your policy to be sure. 
  • Class 2. This offers the same cover as class 1, but includes a named driver. 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. This 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 (as explained above). 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? 

These terms are often used interchangeably, but business car insurance and commercial car insurance aren’t the same thing.  
 
Business car insurance provides cover for business use, other than commuting. Commercial car or vehicle insurance is used for taxis, trucks, delivery vans and business fleets. Like regular vehicle insurance, it offers three levels of cover – third party, third party fire and theft, and comprehensive insurance.  
 
Compare taxi insurance with Compare the Market 

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. The leasing company should provide your company car insurance, but you’ll need to check.  

Can I get temporary business car insurance? 

If you only use your car for work very occasionally, you probably won’t need to fork out extra money for business cover. Fortunately, some insurance providers offer the option of adding temporary business insurance to your policy. That could be helpful if you’re just going on a short business trip. 

How do insurance providers calculate costs for business car insurance? 

Providers will look at several factors when pricing your policy. These include your mileage, what you’re using your car for, your occupation and how many hours you spend driving for work. 

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

There are a few ways you may be able to reduce the cost of your business car insurance:

  • see if increasing your voluntary excess reduces your premium – although always keep it at a level you can afford if you have to make a claim
  • you might also want to see if  improving your car's security  affects your premium price. 
  • if your business has three or more cars, it might be eligible for  fleet insurance. That’s often the cheapest way to insure a group of cars and drivers. 
  • paying your  premium upfront  is often cheaper than paying it in instalments. 
  • shop around – by using a comparison site like Compare the Market, you can easily compare good-value business car insurance that could be ideal for your line of work. 

Although business car insurance is usually more expensive than regular car insurance, don’t be tempted to save money by sticking with standard cover. If you do, and you use your car for work, you may invalidate your policy. 

How much does business car insurance cost?

£591 average annual premium for policy holder** £328 average annual premium for policy holder and any named driver*** £408 average annual premium for policy holder and spouse**** 

**Average premium of £591.11 based on the average P1-5 prices (5 cheapest prices) for enquiries with a clickthrough. Based on Compare the Market data for December 2019 to March 2020 for social, domestic, pleasure, commuting (SDPC) and business use for the policyholder only. 
  
***Average premium of £328.74 based on the average P1-5 prices (5 cheapest prices) for enquiries with a clickthrough. Based on Compare the Market data for December 2019 to March 2020 for social, domestic, pleasure, commuting (SDPC) and business use for any named driver. 
  
****Average premium of £308.85 based on the average P1-5 prices (5 cheapest prices) for enquiries with a clickthrough. Based on Compare the Market data for December 2019 to March 2020 for social, domestic, pleasure, commuting (SDPC) and business use for the policyholder and spouse only. 

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Daniel Hutson,

From the Motor team 

What our expert says… 

“If you drive for work, you’re likely to be spending a good deal of time on the road. Although it can be more expensive, business car insurance can give you the cover you need, as well as peace of mind.” 

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 a bit 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 
  • 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. 

Start a quote

Business car insurance providers 

With Compare the Market, you can compare quotes for 117^^ car insurance provider products, including from Admiral, RAC, LV=, Elephant, Diamond and more. 

^^Correct as of February 2020

 

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