Car insurance for business use

If you use your car for business purposes, whether it’s a work van, delivery truck, a part-time taxi etc, it’s a good idea to consider getting car insurance for business use. Standard consumer car insurance policies often don’t cover a vehicle while it’s being used for business purposes, which can lead to insurers denying a claim.

Business-use car insurance is for when you drive the same car for business and personal use and is a way of extending a standard policy, so it provides cover when you drive for business purposes. Company cars, or cars which are only used for business purposes usually require commercial car insurance.

What makes business-use car insurance different?

When you take out a car insurance policy, you often have the option to select “business” use during the application process. An insurance application might ask whether you:

• Drive the car for personal use only
• Occasionally drive the vehicle for business use
• Regularly drive the vehicle for personal and business use

Most comprehensive policies automatically exclude cover, if you use the vehicle for:

• Carrying passengers or other people’s goods for payment
• Driving tuition for payment
• Hiring the car to other people for a fee

If you do not specify that you use the vehicle for both personal and business driving, the policy may not cover you at all while driving for business purposes, and the insurer might decline any resulting claims. By selecting business use during application, your policy may include additional cover, such as:

• Tools of trade, under personal effects cover
• Insuring your business partners, employers, employees or associates to drive the car

When your vehicle is essential to your income, for other than just driving to work, you probably need a car insurance for business use policy. For example, if you carry passengers for pay, that is a business purpose, or if you sometimes use your car to transport construction materials to a building site that is also a business use.

How much does business-use car insurance cost?

Cars that are used for business purposes tend to be on the road more frequently, which makes a significant difference to the likelihood of being involved in an accident. As such, it generally costs more to insure a vehicle for personal and business use than it does to cover it for personal use alone.

A vehicle can face additional risks to those of being driven for everyday use. For example, most people never drive their car onto a construction site or carry potentially hazardous cleaning materials in their vehicle, while you might do it every day.

Insurance providers determine the cost of a business-use vehicle policy by the policy options you select, and factors such as:

• The type of vehicle
• The vehicles’ primary use
• How many different drivers will use it
• The types of damage it may be subject to

What does a business-use car insurance policy not cover?

You will typically find the same standard exclusions as most other car insurance policies, with a few additions. You may not be able to claim for:

• Using the vehicle in connection with motor industry tests or demonstrations
• Renting or hiring the vehicle to other people, or if it’s someone else’s possession for sale purposes
• Damage to the vehicle as the result of bitumen or concrete setting
• Unsafe use of cranes, in connection with the vehicle
• Any asbestos liability
• Financial loss resulting from the vehicle being unusable

With car insurance for business use, insurers are more likely to understand you do not necessarily have complete knowledge or control of your employee’s actions. Depending on the policy, the provider may still provide partial cover when you weren’t driving the vehicle, but your employee:

• Refuses to take a legal breath, blood or drug test following an accident, if you can demonstrate you were not aware of the driver’s condition or refusal.
• Is driving unlicensed without your consent, if there is the reason to believe you didn’t know, such as, they were using a fake license; their licence had recently expired or been cancelled as a result of unpaid parking fines.

Does business car insurance cover company employees?

If you’re insuring a single car for business use, there’s nothing stopping you from allowing employees to drive it. All you would have to do is list them on your policy as listed drivers. If you don’t have them listed, then you would have to pay an additional excess called an unlisted driver excess if one of them causes an accident. This would be placed on top of your standard excess.

However, if you have a fleet of cars and multiple employees driving them, business use car insurance would no longer be adequate and you’d need commercial car insurance instead.

How to find the right business-use car insurance policy

The right policy should meet all three of your fundamental needs:

• It’s affordable
• It has adequate cover for your driving
• It effectively meets the specific requirements of your business driving

Most comprehensive business-use policies are suitable for personal driving use, so you can pay particular attention to matching the cover to your business. For example, a travelling salesperson might expect long-distance driving and frequent starting and stopping; while a builder may be more interested in protection from the risks associated with driving onto a construction site. Consider:

• The specific type of damage or hazard you are likely to encounter
• Whether employees will also be using the car
• If you need cover for an equipment trailer or caravan
• Whether you need trade tools cover or cover for the equipment you carry in a trailer
• What level of liability coverage do you need?
• What kinds of goods or equipment you tend to carry in your vehicle on a daily basis, and the risks these may pose?
• What kind of vehicle you are insuring and the number that needs covering?

Cars, trucks, vans etc. used for business can be insured under this policy type. The type(s) of vehicle you require cover for may have a further impact on cost and protection.

It’s possible a standard car insurance policy is adequate, but you should check the exclusions to find out whether the policy still covers you for driving the car for business purposes. If you have more complicated business needs or want cover for multiple vehicles, it might be worth consulting a car insurance broker, so they can help find the right level of protection for you and your livelihood.