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Last updated: 09 September 2021
If you regularly use your car for work, then a standard car insurance policy may not be providing you with the cover you need. Read our useful guide to find out if you need business car insurance.
What is business car insurance?
Insurance providers see it as more of a risk if you are driving your car during business hours because you will be covering more miles at busier times.
A standard car insurance policy should cover you for all domestic and social use of your vehicle, which includes things like going to the shops or driving to a friend's house. Often it will also cover your commute to and from work. However, if you use your car for business purposes, such as driving to meetings, visiting work sites or driving staff members around, you may need business car insurance.
When looking for insurance make sure you are honest about how you use your vehicle and insurance providers will then make sure that you are given a suitable policy.
However, business car insurance isn't always relevant even if driving is an integral part of your job. This is the case if you:
- Drive a taxi or delivery van: Instead you should be looking at commercial car insurance, or specialist taxi insurance, options.
- Drive a company car: In this case, insurance should be taken out by the company that owns or leases the vehicle (ie your employer).
Types of business car cover
There is no industry standard for business car insurance, but you’re likely to be choosing from one of the following principal classes:
- Class 1 – covers driving between multiple places of work or travel to meet clients.
- Class 2 – covers the same as Class 1 but includes a named driver. It is likely that the policy will require both you and the named driver to work at the same company.
- Class 3 – the most comprehensive cover which covers both Class 1 and Class 2, as well as delivering samples (not commercial merchandise) and door-to-door sales.
How much does business car insurance cost?
Business car insurance is expensive, but it may still be cheaper than a standard car insurance policy that covers your business travel needs. If you add on business cover to an existing comprehensive car insurance policy, it will likely end up more expensive than if you'd simply taken out a business car insurance policy.
It's important to remember that your driving habits have more of an affect on your premiums than the fact of using your car for work. However, if you want to reduce the cost of a business vehicle insurance policy further, then there are a number of things to consider:
- Make sure you choose a suitable policy – there is no point taking out comprehensive cover if you will just be driving to the occasional client meeting. It is likely you will be over insuring yourself.
- Excess - check whether increasing your voluntary excess will reduce your premium. However, remember to keep it at a level you can afford.
- Security - making sure your car is secure when it is parked at home and at work will help to reduce your insurance premium.
- Build up your no claim's bonus – the longer you go without making an insurance claim, the lower the cost of insuring your vehicle.
- Shop around – you can use our handy car insurance comparison tool to make sure you've had a broad overview of the market, helping you to find the right business car insurance policy for you.
Who pays for business car insurance?
If you are using your private car at work and paying for business car insurance, you may be entitled to claim for the insurance on a self-assessment tax return, providing you are self-employed.
It is also normal for companies to reimburse their employees for business miles at 45p a mile as the current standard reimbursement rate, although this may drop to 25p if you're covering a lot of miles. (Rate true 20 April 2020).
If you drive a company car, your employer has a legal responsibility to make sure their vehicles conform to road traffic laws and are properly maintained.