Business car insurance

Looking for car insurance for business use? Here's what you should consider before applying.

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If you drive a work van, delivery truck or any other vehicle for business, your standard car insurance policy may not be enough to cover all damages or injuries that result from an accident while you’re on the clock. If you’re the business owner, not having the right cover could leave you with some hefty bills to pay out of your own pocket.

When your vehicle is essential to your income, for reasons other than just driving to work, you will likely need business car insurance. This will protect both company-owned vehicles or your own, if you use it for work.

What makes business car insurance different?

Insurers view business driving differently because people who drive for work may well drive more, and to more unfamiliar roads, or they may carry extra equipment.

Business car insurance could be your strongest protection if you:

  • Own a business that requires regular driving. A business car insurance policy can protect you and your employees against the costs of damages and injuries that are the result of a car accident.
  • Frequently use your personal vehicle for business. If you drive your personal car or a company-owned vehicle on business as either an employee or independent contractor, business car insurance can safeguard you while driving on the job.
  • Own a vehicle registered to a business. Your standard car insurance provider will reject a claim for company cars.

Most personal car insurance policies will automatically exclude cover for:

  • Vehicles driven primarily for business.
  • Commercial-type vehicles, like tractor-trailers, shuttle buses and limousines.
  • Cars owned by a company and available for occasional use.

What are the different types of business car insurance?

Depending on what you use your car for, it’s up to you to decide if you need business car insurance. If you do, there are three main categories to choose from. These are:

  • Business Class 1: Choose this if you drive to a few different places for work or perhaps switch between offices or sites. It might not be the primary use of your car but you would still require a slightly higher level of protection.
  • Business Class 2: Choose this if you know your car will be driven by you and other people for work purposes. This might be your spouse and employees.
  • Business Class 3: Choose this if you drive extensively for work, especially if you have to drive to an unlimited number of new destinations. For example, a sales representative.

Carefully review your current personal car insurance policy and close any potentially disastrous gap by picking up a business car insurance policy.

What if I drive for Uber or Lyft?

If you drive for Uber, Lyft or any of the other growing number of private or public rideshare companies out there, and your driving makes up the main aspect of your job, business car insurance won’t cover you. You’ll need to get a specific type of commercial private hire car insurance to suit your business needs.

How much does business car insurance cost?

Cars that are used for business purposes tend to be on the road a lot more, which makes them more likely to be involved in an accident. Because of this fact, it generally costs more to insure a vehicle for business use than it does to insure it for personal use alone.

The cost of your business car insurance depends on factors that include:

  • The type of vehicle you’re insuring — make and model, year and even weight.
  • Cover limits and excesses.
  • How the vehicle is used — for instance, for office travel, to deliver supplies or to visit client or job sites.
  • The number of drivers using your car.
  • Each named driver’s experience and accident history.

How to find the right business car insurance

When looking for business car insurance, it’s better to err on the side of caution. Overall, the right policy will meet your three main needs:

  • It’s affordable for your budget.
  • It adequately covers you and any potential drivers.
  • It effectively meets the specific needs of your business driving.

When looking for the right cover for your needs, ask yourself about:

  • The types of damage or hazards you’re likely to encounter while driving for business.
  • Whether other employees will also drive your car for business.
  • The level of liability you’re comfortable with.
  • The types of goods, equipment or passengers you tend to carry daily and the risks they could bring.
  • The type of vehicle you’re insuring and how many more need cover.

How to keep business car insurance costs down

Generally, business car insurance is likely to be more expensive than standard car insurance but there are still ways to keep your costs down.

  • Consider a car with a smaller engine or a car that is more energy efficient.
  • Store your car in a secure garage overnight.
  • Install extra security devices such as alarms, immobilisers or trackers in order to keep potential thieves away.
  • Consider reducing the excess to lower your premium. But remember it needs to be realistic in case you do need to make a claim.
  • Think about your expected annual mileage and consider negotiating a realistic limit with your insurer. The more miles you travel, the greater the risk.
  • Shop around online for the best business car insurance policies that suit your needs.

Business car insurance frequently asked questions

*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (Mar ’24). 51% of car insurance customers could save £539.54
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