Compare car insurance for business use
Do you need business car insurance? 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.
Most of us can simply say personal use, which covers you for domestic and social purposes.
Many policies will also include commuting under this definition – it's best to double-check your terms and conditions to be sure though. And be careful if you're lift sharing, as this can invalidate your car insurance (see below for more info on this).
As a quick aside, do you drive a van to work? Well, we're only talking about car insurance for business use here. It's a completely different thing when it comes to van insurance where there's no 'social, domestic, pleasure and commuting' category. If you use a van to commute to even one place of work, you'll need commercial van 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.
But you'll still need to inform your insurer that you'll be using the car for commuting.
Business car insurance explained
There's a big difference between using a car for work and using a car to get to work.
A 'social, domestic, pleasure and commuting' policy won't cover you if you're using a car for business use – such as driving to meet clients, visiting multiple work sites or transporting other members of staff.
If you use your car for your job – for anything other than driving to a single place of work – then you almost certainly need business car insurance.
Otherwise, you risk finding yourself without cover when you need to make a claim.
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
If you search for cover through GoCompare, you'll be asked what you use your vehicle for. The options will be:
- Social only: Covers you for normal day-to-day driving – such as shopping and visiting friends and family – but not commuting
- Social including commuting: Covers social use plus commuting to a single, permanent place of work
- Business use: Includes social use, and also covers the designated drivers in connection with their jobs – such as driving to different sites or offices, and prearranged meetings away from the normal place of work
- Commercial travelling: Covers social use, and also using the vehicle for commercial travel; for example delivering goods or door-to-door sales. As there are different definitions of commercial travelling, you should check with the insurance company before you decide
When comparing car insurance, the quotes you're given will reflect the sort of use you've said the vehicle will be put to.
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.
How much your premiums will go up by will depend on who your car insurance is with. But one way to try to keep the cost down is to compare business car insurance premiums.
So long as you're honest about the car's use when you apply for cover, you'll get appropriate quotes and insurers will price up policies accordingly
Here at GoCompare, we check quotes from over 120 insurance brands to help you find the right policy at a competitive price.
It's also important not to over-insure yourself.
Insurers may ask how many miles you're doing on behalf of your company.
If you over-estimate your mileage then you'll simply be paying for cover you don't need. Make a realistic estimate of the miles you put in on behalf of your boss, and don't pay any extra.
Even if you're using your car for business as well as personal driving, all the standard tips for cutting motoring insurance costs apply.
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 September 2018, 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.
However, there are still different levels of commercial car insurance, and you need to make sure you have the right cover in place.
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
There's no industry-wide standard definitions, but most business car insurance policies fall into one of the following...
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 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. Class 3 and 'commercial travelling' are the same level of cover.
Don't worry if you're not sure what level of cover you need. So long as you're honest about the car's use when you apply for insurance, you'll get appropriate quotes and insurers will price up policies accordingly.
Won't my employer's insurance cover me?
Some larger businesses may well have insurance policies in place that cover their staff if they have an accident while driving their own vehicle for work.
If your employer does then you may not need to add business use to your policy, as you'd simply end up paying more for unnecessary insurance.
However, it's a good idea to check whether or not your employer provides cover, and to have details of how you 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 how comprehensive that protection is so you can be confident if you ever need to claim.
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," says GoCompare car insurance’s expert, Matt Oliver.
Did you know...?
- Not all insurers cover you if you're lift sharing, and if they do there may be conditions attached
"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," says Matt Oliver.
Yet drivers shouldn't automatically assume they have appropriate insurance cover.
On 12 September 2018, GoCompare analysed 302 fully comprehensive car insurance policies listed on the matrix of independent financial researcher Defaqto, and found that nearly 7% of them specifically excluded cover for lift sharing.
While the rest of the policies allowed lift sharing, it was sometimes subject to certain conditions – such as your vehicle not carrying more than eight passengers and/or you not being able to make a profit out of the arrangement.
Drivers offering lift shares are only permitted to ask passengers for a contribution towards fuel and other running costs.
Matt 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 polices.
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.
And you may be more likely to have an accident if you work as a driver or courier for an app-based company, so it's a good idea to get the the right insurance in place for the right job.
The emergence and rise in the popularity of gig work for couriers could lead to an increase in risk factors affecting the health and safety of people who work in the gig economy, and other road users.
And if there's one thing the insurance industry doesn't like, it's risk.