Compare car insurance for business use
Here's everything you need to know about driving a personal vehicle to your job and/or for business use, whether you're self-employed or working for a company.
- If you use your car for anything other than driving to a single place of work, you almost certainly need business car insurance
- Don't assume you're covered for lift sharing – some insurers exclude this
- Be honest and accurate with your level of business use – this'll help you compare appropriate policies
- Company cars and work cars should be insured by your employer, but it's always worth checking
When you buy car insurance, you'll be asked what you intend to use the vehicle for.
If you use your car for work, you’ll need business car insurance.
Do I need business car insurance if I use my car to commute to work?
No. If you drive a car to a single place of work, such as your office, you don't need business car insurance.
Just make sure you select cover that includes commuting use when you take out the policy.
Business car insurance explained
If you use your car for anything other than driving to a single place of work, then you almost certainly need business car insurance. That could include driving to meet clients, visiting multiple work sites or transporting other members of staff. Common business journeys that may not be covered by a private car insurance policy include:
- Travelling to a training course
- Going to the bank
- Driving to the post office
- Driving to another office
- Attending company away days
When comparing car insurance, the quotes you're given will reflect how you've said you’ll use the vehicle.
How much does it cost to add business use to car insurance?
There's no getting away from it, your car insurance premiums will be higher if you state that you use your vehicle for work.
This is down to insurers calculating you'll be on the road more, will be driving down unfamiliar roads, and possibly in heavy traffic.
- This guide only covers car insurance. If you use a van to commute to even one place of work, you'll need commercial van insurance.
It’s important to be honest about how you use your car to make sure you don’t invalidate your insurance.
Shop around and compare quotes to get the best deal for you.
It's also important not to over-insure yourself as this might push costs up unnecessarily.
Insurers might ask how many miles you're doing on behalf of your company, so if you over-estimate your mileage then you'll simply be paying for cover you don't need.
Can I ask my employer to pay the extra for business car insurance?
It's normal for companies to reimburse their staff for business miles in their personal cars.
The amount per mile should be higher than the cost of fuel as it should also reimburse you for the extra insurance costs and wear and tear on your vehicle.
In March 2019, 45p a mile is the standard reimbursement rate, although this may drop to 25p if you're covering a lot of miles. These figures are linked to HMRC guidelines on Mileage Allowance Payments (MAPs).†
How much your employer will give you for using your own car for company business depends on the employer and is a matter for negotiation as circumstances vary
You should also be able to claim for any toll roads or other expenses you incur while on the road for business.
Negotiate this with your employer before you agree to drive your own car.
Employers should also be aware that they have a legal responsibility to ensure that all vehicles used for work purposes conform to road traffic law, are safe, properly maintained and fit for purpose.
This applies whether the vehicle is owned by the business or owned privately.
What are the different types of business car insurance?
If you're running an occasional workplace errand in your car or visiting clients, you won't need the same level of insurance as someone who uses their car commercially, such as a taxi driver.
There are no industry-wide standard definitions, but most business car insurance policies fall into one of the following...
Employers need to have procedures in place to ensure that all vehicles (irrespective of who owns them) that are used for work purposes conform to road traffic law, are safe and properly maintained, and are fit for purpose
Royal Society for the Prevention of Accidents
Business class 1 car insurance
If you just do a few miles on behalf of the company, and you're not delivering things or driving extensively on sales trips, then you probably only need class 1 business car insurance. You might also see this called 'business use by you'.
A lot of these policies will also cover your spouse or partner too, so you might also see 'business use by you and spouse/civil partner'.
Business class 2 car insurance
If you and any other named drivers are using the vehicle for business, you'll need class 2. 'Business use for all drivers' is another term for class 2.
Business class 3 car insurance
Finally, if you're using your car for selling or commercial travel as well as other named drivers, you'll need class 3 business car insurance, sometimes called 'commercial travelling'.
If you’re not sure what level of cover you need, just be honest about the car’s use when you apply, and insurers will give you the appropriate quotes.
Won't my employer's insurance cover me?
If your employer does have insurance in place for its employees, then you might not need to add business use to your policy, as you'd simply end up paying more for unnecessary insurance.
It's a good idea to check whether or not your employer provides cover, and to have details of how to claim in the event of an accident.
Do I need business car insurance if I drive a company car?
If your car belongs to your employer and is a perk, then the company should have insured it.
That means you're covered for personal and business use, although you should check with your boss exactly what’s covered.
Don't assume you're covered...
"The rise in multi-location workplaces and flexible hours mean that many workers now use their own vehicles for ad-hoc or informal company business," said GoCompare car insurance’s expert, Matt Oliver.
"But employers shouldn't assume that their workers are covered just because they have private car insurance.
"Companies have a legal responsibility to ensure that vehicles used on company business are safe to use, irrespective of its owner. And this includes being fully insured for business usage.
"Some insurers don't charge an additional fee for extending car insurance cover to include business use – and even if they do it can be relatively inexpensive.
"It's important that workers check their policy to make sure they're properly insured, no matter how infrequently they use their cars on company business.
"Also, employers should talk to workers about the need to have the correct level of cover before they do any business journeys in a private car."
Can lift sharing invalidate your car insurance?
The rising cost of motoring has made lift sharing an attractive proposition for many drivers, " said Oliver.
Yet drivers shouldn't automatically assume they have appropriate insurance cover.
On 13 March 2019, GoCompare analysed 334 comprehensive car insurance policies listed on the matrix of independent financial researcher Defaqto and found that 8% of them specifically excluded cover for lift sharing.
While the rest of the policies allowed lift sharing, it was sometimes subject to certain conditions.
Oliver added, “As innocent as it may sound, if drivers are accepting money for lifts, they could end up invalidating their private car insurance policies.
"Many policies state, if drivers are accepting money with a profit, they could end up being classed as using their vehicle for ‘hire or reward’.
"It’s harmless accepting the odd few pounds, but drivers need to watch how much they’re accepting, and that it’s not for financial gain."
Business car insurance for Uber, Amazon, Deliveroo etc?
Uber drivers and those using other ride-sharing apps are effectively running a business. So, they'll need private hire vehicle insurance as they won't be covered on standard private car policies.
Private hire vehicle insurance is also called taxi insurance and is separate to business car insurance.
Yet class 3 business car insurance should provide you with adequate cover if you're a courier for Amazon and use your car for deliveries.
Same thing with Deliveroo, Just Eat, and other app-based delivery services. If you have an accident your private car insurance will likely be invalid, so explore class 3 business car insurance.
Find cheaper business car insurance quotes
Even if you're using your car for business as well as personal driving, all the standard tips for cutting motoring insurance costs apply.
Build up a no claims bonus, consider improving your vehicle security and keep it off the street at night if possible.
You can compare business car insurance with GoCompare. Just choose the level of business car insurance you require and take a look at the options available. It's business time!