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Business car insurance

If you’re using your car for business purposes then you’ll need to take out a specialised business insurance policy on your vehicle. Such a policy will give you more cover than a conventional insurance policy, which will only account for social, personal and domestic uses of your vehicle.

In This Guide:

What kind of cover can I expect from a business insurance policy?

As with standard car insurance, business insurance policies come in various shapes and sizes, with different types of policy offering different kinds and levels of cover.

The three main levels of cover are:

  • Third party: covers any damage caused by you to another driver, their vehicle or their property.
  • Third party, fire and theft: covers your own vehicle if it’s stolen or damaged in a fire, as well as covering third parties.
  • Comprehensive: often the cheapest level of cover, this covers both damage to third parties and your own vehicle.

Who needs business car insurance?

A standard insurance policy will cover you for general day to day usage of your vehicle, and this invariably includes your commute. This means that you don’t need worry about needing a specialised business insurance policy just to cover you for your drive to and from work.

However, if you’re using your car for business purposes then you will need a specialised policy to get the cover you need. You may need business car insurance if you do any of these:

  • Drive during work hours
  • Drive clients around
  • Regularly visit several different offices or sites
  • Drive colleagues to meetings
  • Drive a large number of miles in a small amount of time for work purposes

As already stated, simple commutes should be covered by most standard insurance packages, but it is always worth checking the small print in order to be certain.

You will also not need to take out a business insurance policy on a company car, as the company who provides the car should also pay for the insurance policy on top.

Commercial Insurance

It is worth noting that business insurance of any class will not cover you for commercial use of your vehicle. This means that if you are a taxi driver, delivery driver or similar, you will need specialised commercial insurance policy.

Types of business insurance - different classes

There are different classes of business insurance available offering different levels of cover at different prices. The exact nature of each class will differ from provider to provider so pay careful attention to the details of the policies on offer.

As a general rule, the more you use your car for business, the higher the class of policy you will need:

  • Class 1 business insurance will usually cover you for travel to and from your usual place of work as well as regular visits to other sites and offices related to your work. These policies will often also cover a spouse as a named driver but only at a standard level – not for business use.
  • Class 2 business insurance policies tend to offer the same level of cover, but will also cover a named third party for business use.
  • Class 3 business insurance will be necessary for the most comprehensive cover. This is for those who use their vehicle extensively for business, travelling hundreds of miles a week and requiring multiple named drivers at the same level of cover.

Why is business insurance more expensive?

Unfortunately, business car insurance tends to be a little more expensive than conventional car insurance, but there are reasons for this, and it is important not to lie in order to avoid higher premiums as being caught out will invalidate your policy.

As a general rule, using your car for business in the ways suggested above means that you will almost certainly rack up a significantly higher mileage than you would for personal use. This immediately increases the risk of accident and therefore the risk of the insurer having to pay out on a claim.

Not only this, but you will likely often be driving during heavy traffic at rush hour, driving on roads you don’t know particularly well, and parking your vehicle in unfamiliar and potentially unsecure locations. All of this adds to the risk on the part of the insurer and thus premiums will naturally be higher than they would on a standard policy.

This doesn’t mean that you have to pay over the odds though – by using a free and impartial online comparison service like ours you can make sure that you still find cheap car insurance policies.

How to get the cheapest business insurance policies

In general, business insurance policies will come with higher premiums that standard ones, but there are always ways to keep costs down:

  • Choice of Car: As with any other policy type, your choice of vehicle is important. There are 50 different brackets within which different cars are placed, with the prices going up steadily from group to group based on factors such as engine size.
  • Drive Carefully: Another way to reduce premiums is to generally take care of your vehicle in a demonstrable way. This means driving carefully and attentively, which you can prove with a telematics or black box insurance policy or building up a no claims discount.
  • Drive Less: The less time spent driving on the roads, the less chances there are of you having an accident and making a claim. Therefore, lower mileage can result in lower premiums.
  • Keep Your Car Safe: taking extra security measures can make your car less likely to be stolen or damaged and so can also lower your premiums. Install an industry-approved alarm or immobiliser, or park it in a secure garage overnight, for cheaper car insurance.
  • Pay Annually: Although this can be a hefty lump sum to pay in one go, paying for your car insurance annually will usually be cheaper overall than paying in instalments.
  • Increase Excess: The higher you set your voluntary excess – the amount you decide to pay on any claim – then the cheaper your car insurance premiums will be. However, make sure that the excess is still affordable should you need to claim.
  • Compare Car Insurance: The most effective way to ensure you get the lowest prices possible for your business insurance policy is the shop around online and use an effective, free car insurance comparison service like ours you can be certain that you’ll find the best deals available.

How to compare business car insurance

Getting a quote for your business car insurance is easy and only takes a few minutes. You will just need to provide a few details including:

  • Your name
  • Your age
  • Your address
  • Your car’s make, model or registration number
  • Your driving history (i.e. no-claims bonus, convictions)
  • Your desired type of policy

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