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What is Business Car Insurance?
Compare Business Use Car Insurance
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Business use car insurance covers privately-owned cars for some (but not all) work-related driving, such as travelling to clients and between different work locations. The type of work-related driving you do determines which 'class' of business use you need, and you can extend cover to include co-workers or employees. Below we explain what business car insurance covers and how to decide if you need business car insurance.
- What is Business Car Insurance?
- Who needs Business Car Insurance?
- What does Business Car Insurance cover?
- FAQs
What is Business Car Insurance?
Business car insurance is like regular car insurance, except it also covers certain aspects of work-related driving (in addition to your personal driving). Specifically, business car insurance can cover a privately-owned car when it's used to drive to visit clients, travel between different work locations and make sales calls. It can even cover someone else (like a co-worker) to drive a car for business purposes.
Business car insurance is for privately-owned cars, not for company-owned cars—company-owned cars would be covered by commercial vehicle insurance).
How to add business insurance on car
To insure a car for business driving, you must declare your business use driving to your insurance provider. You can either alert your existing insurer as to the change to start using your car for business use now; alternatively, if you expect you'll start driving for work in the future and the timings work out, you can make the distinction at renewal or when taking out a new policy.
It is very important that you don't use your car for business use until you have secured 'business use' car insurance. You must be insured for business driving before you start clocking miles for work—or else you won't be covered.
How do you get business use cover? When filling out an application for car insurance online, you can indicate that you want cover for business usage when answering the question, "What will you use the car for?" There are usually 6 options to choose from. (In the next section we'll define what these different business options mean.)
Is business car insurance the same as company car insurance?
Company car insurance is for cars that are used for business purposes—but these cars are typically owned and insured by the employer. A company car will certainly need to have 'business use' driving covered for insurance purposes since a company car would be used for business-related driving.
People can also add 'business use' to their personal car insurance (that is, for a car they personally own or lease). In that case it's their responsibility to insure the vehicle.
Car Insurance Classes of Use
- Social, domestic and pleasure
- Social, domestic, pleasure and commuting
- Business use by you (Business Class 1)
- Business use by you and spouse (Business Class 1)
- Business use for named drivers (Business Class 2)
- Commercial travelling (Business Class 3)
What is 'commercial travelling'? Commercial travelling typically refers to the type of driving a travelling salesman might do—driving long distances as part of work to carry out unscheduled sales calls, for instance. It's not commonly used.
Who Needs Business Car Insurance?
A motorist needs to insure their car for business use if their driving falls under one of three 'business usage' categories—but what actually is 'business use'? Below we list definitions for the three different classes of use so you can see if your driving might be considered 'business use' for car insurance purposes.
What are business class codes/uses for car insurance?
- Business Class 1: Covers business driving away from your regular office to multiple work sites or to visit clients or customers. Many insurers let you include your spouse in the coverage so long as their business driving is for your business (not, for example, for their own job). You should also be covered for regular day-to-day driving (e.g., for social, domestic and pleasure driving and commuting to/from your permanent place of work).
- Business Class 2: The same work-related driving coverage as Business Class 1, but expanded to cover an additional named driver, for instance an employee or co-worker.
- Business Class 3: Covers long-distance use to make business calls without prearranged appointments (e.g., a travelling salesperson). This may also be referred to as 'commercial travelling'. You're usually allowed to carry samples, but if you make deliveries you'll need commercial car insurance instead.
The distinction between the different categories lies in who will drive the car and what type of business driving they do. FYI, when you fill out a car insurance application on a comparison site, you may only need to initially specify 'business use', not a specific class of cover.
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Note: before adding an employee or a co-worker onto your business car insurance policy (Class 2), you might want to check their driving record for penalty points, disqualifications or to see which vehicles they are eligible to drive.
You might need business car insurance if you are employed by someone else, or if you are self employed. Here are some examples to show different scenarios when someone might need to specify business use on their car insurance. But just use this information as a guide—always check with your insurer and explain how you use your car to ensure you have the right cover.
Examples
- A carer who uses their personal car to drive between their clients' homes (Class 1 business use).
- A self-employed piano teacher driving his car to visit students every evening and weekend (Class 1 business use).
- An estate agent employed by a local company who drives their own car to drive between home showings (Class 1 business use).
- A nanny uses her car to run errands and drive the children around to play dates and after-school activities (Class 1 business use).
- An architect names their assistant as a named driver on their business car insurance policy so that the assistant can help out with driving on longer journeys to visit far-afield client sites (Class 2 business use).
- A paper salesman uses their own car to drive around the UK visiting small businesses to sell paper supplies (Class 3 business use cover).
- A pizza delivery person would not be covered under 'business use' so they need hire & reward cover, a type of commercial vehicle insurance, which covers getting paid specifically to deliver goods (and people).
- A private car hire driver would not be covered under 'business use' so they need hire & reward cover, a type of commercial vehicle insurance, which covers getting paid specifically to deliver (goods and) people.
What does Business Car Insurance cover?
Business car insurance covers your normal day-to-day driving, commuting and also work-related driving to other work locations or client sites. Here are the different types of driving that a business car insurance policy can cover:
- Social, domestic and pleasure driving
- Commuting to and from your permanent place of business
- Driving between multiple work locations
- Driving to visit clients or customers
- Other driving related to your business (e.g., to the bank or post office)
- And possibly 'commercial travelling,' which is essentially for certain salespeople (this falls under Business Class 3)
Next, let's look at the extent of coverage available on business car insurance policies. There are three types of car insurance coverage you can buy for business use, which are the same as for regular car insurance: TPO, TPFT and Comprehensive.
Third Party Only
Third Party Only (TPO) business car insurance is the most basic kind of cover available, and it provides the minimum level of cover required by UK law. TPO insurance protects against costs resulting from injuries to other people and damage to their property (e.g., car, wall, etc.) if you are at fault in a collision. Third Party insurance doesn't cover damage of any kind to your own car, or for theft of your car. Third Party Insurance pays out to compensate a third party only—never to compensate you.
Third Party, Fire and Theft
Third Party, Fire and Theft (TPFT) insurance includes the coverages included in TPO insurance, plus protection for your own car if it's damaged in a fire or stolen.
Comprehensive
Comprehensive car insurance offers the widest range of protection. In addition to including the coverages included in TPO and TPFT policies, you can also be covered for injury to yourself and damage to your own car in the case of an accident (and sometimes for other events like flood damage).
FAQs
A motorist needs business car insurance if they use their car for work-related driving beyond commuting to and from a permanent place of work. For example, if you drive between multiple work locations, drive to client's premises or do other work-related driving then business use would be required in addition to cover for personal driving. However, if you make deliveries or transport goods or people for money, or transport goods, tools, or stock of any nature then some form of commercial car insurance would be required—declaring 'business use' won't be enough.
Yes, the three classes of business car insurance should also provide cover for social, domestic and pleasure driving.
While business use does cover commuting, if your only 'work-related' driving is to/from a permanent place of business then you do not need to pay even more for 'business use' on your car insurance—however you do need to declare your commuting to your insurer so they can add this to your regular car insurance policy, which could increase the cost of your car insurance somewhat. Be sure to contact your insurer and clarify this.
If you're caught without business car insurance in the UK, you're essentially an uninsured driver. In that case your insurer won't cover any claims, for instance if you have an accident while driving to a client's premises.
If you're self employed you can claim vehicle expenses such as insurance, repairs and servicing, breakdown cover and fuel for work-related driving (e.g., visiting a client). But you can't write off your non-business driving or normal commuting. Alternatively you can claim simplified expenses using a flat rate for mileage instead of claiming the actual costs of buying and running your vehicle.
Business car insurance is just like regular car insurance, but it also makes it legal for you to drive for work in certain situations—driving between multiple work locations, visiting clients, etc. These activities are not covered under a normal car insurance policy. (Note: Commuting between home and a permanent work location are covered under regular car insurance so long as you've declared you usage as 'social, domestic, pleasure and commuting'. And business car insurance does not cover delivery of goods or services like driving paying passengers.)
Yes, if you are claiming mileage that means you're driving for work—and if you're driving for work then you are legally required to have business car insurance. If you drive for work without business car insurance you will not be covered and are essentially 'uninsured'.
A nanny would need business use car insurance to cover their own car for driving the children from place to place, running errands, or performing any other aspects of their job—or if they have multiple nanny jobs they drive to. A nanny may not need business car insurance if they work for only one family and they only use their car to travel between their home and their employer's home and the beginning and end of each day (that is, they never drive the children or run errands for their employer). Check with your insurer to be sure.
Class 1 business use for cars essentially covers work-related driving such as travelling between multiple work locations, visiting client sites or being a nanny. It does not cover getting paid to make deliveries or drive passengers where those passengers have paid for the trip (that's 'commercial' use). It also wouldn't cover travelling salesman (that falls under Class 3).
Business car insurance offers similar coverage to regular car insurance, it just also covers certain work-related driving you might do. To get business car insurance you need to declare to your insurer that you use your car for business (as opposed to just social, domestic, pleasure and/or commuting).
You would need business car insurance if your employer asks you to use your car for work-related activities or you are self employed and you use your car for your business. Work-related driving that falls under business use includes driving between more than one work location, driving to see clients, running work errands, etc. but not making deliveries or driving paying passengers.
No, 'business use' does not cover food delivery. Food delivery drivers need courier insurance (you can actually buy specialised delivery driver insurance) because none of the three classes of 'business use' on car insurance cover the delivery of goods.
Yes, business car insurance typically costs more than personal car insurance. Personal car insurance is cheaper than business car insurance because of the lower risk profile (fewer miles, less chance of theft, etc.).
Van insurance works differently to car insurance when it comes to business driving. For a van, any business-related driving necessitates the needs for a commercial van insurance policy (aka business van insurance policy). There usually isn't an option to have a social van insurance policy with added commuting or business use cover to protect a van used for commuting or driving between different client sites. A van used for commuting, driving between clients, carrying equipment, or other types of business use needs a commercial or business van insurance policy. Social use can be added onto that to cover any personal driving for which the van is used. Read more about types of van insurance here.