Car insurance for business use
COMPARE QUOTES FOR WHEN YOU NEED TO INSURE YOUR CAR FOR WORK USE
What’s business car insurance?
It’s a type of motor insurance that covers your car if you use it for work.
When you apply for a quote for car insurance, the provider will ask what you use your car for to determine what class of use you need to be insured for.
A standard car insurance policy usually covers you for the class of use known as ‘social, domestic and pleasure’ or ‘social, domestic and pleasure plus commuting’.
These classes cover you for day-to-day car use, such as driving to the shops, dropping off children at school or visiting family and friends.
The commuting part of this class of use covers your journeys to and from one regular, fixed place of work.
However, if you use your car for any other work-related activities, which includes driving to different sites and company offices, visiting clients and attending conferences and meetings, or even to go to the post office or bank on business errands, then you need to opt for ‘business use’.
Business car insurance like this covers you not only for social, domestic, pleasure and commuting - but also for all the other work-related journeys you make.
Do I need it?
You’ll need business car insurance if you use your car for work-related journeys on top of your regular commute. So that might include things like:
- Travelling to a training course
- Going to the bank
- Driving to the post office
- Driving to another office
- Attending company away days
If you use your car as part of your employment like this and don’t let your insurer know, then you’ll be driving without proper cover.
It means that if you were to have an accident while driving on a work-related journey and needed to make a claim, your insurance company could refuse to pay out.
How much does it cost?
Your insurance could be more expensive if you use your car for work because insurers think you’re more likely to have an accident. They’ll assume you’re on the road more, driving in places that aren’t familiar to you and possibly in heavy traffic too.
But we checked, and business car insurance can still work out cheaper than standard car insurance. On average, fully comprehensive business car insurance cost our customers over £60 less than standard fully comprehensive insurance.*
Other factors, including the car you drive, your driving history and mileage, may contribute to the cost of your insurance more than whether you drive your car for work or not.
Be honest about how you use your car though. If you don’t you could invalidate your insurance.
*Average purchase price through Go.Compare for annual comprehensive car insurance policies with social and commuting cover versus business cover between Jan to Nov 2022.
What does business car insurance cover?
It covers you for everything that a standard car insurance policy does, depending on the level of cover you take out (third-party only, third party fire and theft or comprehensive cover).
But it offers a higher level of cover than a ‘social, domestic, pleasure and commuting’ class of use policy. With business car insurance you’re also covered to use your car for work-related journeys.
What isn’t covered?
Business car insurance won’t cover you to use your vehicle to do jobs like:
- Couriering and making regular goods deliveries
- Taxi driver
- Driving instructor
For these types of jobs, where your job depends on your vehicle, you need to take out commercial car insurance.
Types of business car insurance
There are three types of business class insurance:
Class 1 business
Covers you for travelling to different locations for business purposes, such as meeting clients, going to different offices or sites and training days
Class 2 business
Includes everything that class 1 does, but you can also add a co-worker as a named driver to the policy
Class 3 business
If you’re someone like a sales rep, who does a lot of business travel and being on the road is a big part of your job, you may need class 3 business use. It covers you for high mileage business travel to an unlimited number of destinations
All insurers will have their own terms for what they class as type 1, 2 and 3, so be sure to check your policy for exactly what will be covered.
£4 million refunded to customers with free excess cover^^
If you need to claim, we’ll pay £250 towards your excess^. Just another reason to make your life choices on Go.Compare.
^Up to £250 refunded after claim settled. Car insurance purchases only. Excludes breakdown, windscreen and glass repair/replacement. Full T&Cs apply.
^^Based on Go.Compare analysis of successful claims, August 2019 - June 2022.
How do I make my business car insurance cheaper?
All the standard tips for cutting motoring insurance costs still apply for business car insurance:
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Don’t over insure yourself
You’ll be asked how many miles you do for business, and if you overestimate, you’ll pay for cover you don’t need
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Pay annually
It’s cheaper than paying monthly if you can afford one lump sum
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Increase voluntary excess
Just make sure you could afford to pay the amount you choose
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Build up a no claim’s bonus
Insurers give lower prices to motorists who are claim free
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Take care with add-ons
Don’t pay for extras you don’t need or want and check whether you’re already covered elsewhere
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Install extra security in your vehicle
Things like steering locks, alarms and a tracker
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Keep your car somewhere secure
Ideally in a garage or off the street in a driveway with security lighting or CCTV
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Shop around
We can help you compare business car insurance
Who pays for business car insurance?
If you work for a company and have a company car, then your employer will usually pay for insuring your car for business use under a fleet insurance policy. In some cases, you may be expected to arrange your own insurance, though, so do check and don’t assume you’re fully covered.
If you own the car and use it for work purposes, or if you’re self-employed and use your car for business then it’s down to you to arrange and pay for a business car insurance policy.
However, some employers may cover the extra cost of business car insurance so it’s worth enquiring.
In any event, you’ll also usually be able to claim business mileage (not including your commute to and from work) on expenses, which can go some way to covering the extra costs that buying business car insurance might incur.
HMRC provides approved business mileage rates every tax year. Currently, the mileage allowance rate for cars is 45p per mile for the first 10,000 miles and 25p per mile for anything over 10,000 miles.
Your employer will be guided by these rates, but they’re not compulsory. They may pay you more or less than this per mile.
You should also be able to claim for any toll roads or other expenses you pay out for on business journeys.
If you’re self-employed, you can claim for allowable business expenses, including car insurance, in a self-assessment tax return.
Record every expense for business-related driving in case the HMRC wants to see them. You don’t need to send the evidence as part of your tax return.
Frequently asked questions
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If your vehicle is vital to your business and your job completely depends on that vehicle, then you’ll likely need commercial car insurance. It’s for people like taxi drivers, delivery drivers and driving instructors.
If you could carry out your business-related journeys using public transport or a taxi, then a business car insurance policy would probably be enough. But if your vehicle plays a vital part in your business, then you may need to be covered by a commercial car insurance policy instead. Check with your chosen insurer before purchasing.
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Yes, your employer will normally arrange and pay for this under a fleet car insurance policy. But don’t assume that’s the case - be sure to check.
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Yes, if you’re self-employed, you can claim for allowable business expenses, including car insurance, in a self-assessment tax return.
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Yes, if you’re claiming business mileage, then you’re using your car for work-related purposes and should have a business car insurance policy in place.
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If you use your car for business-related travel only once or twice a year - for example to drive to an annual conference or to visit a particular client - and use it purely for social, domestic and pleasure purposes the rest of the time, you could look into taking out temporary business cover for those particular times.
This could be a cost-effective option if taking out business cover would significantly increase your annual premium.
Depending on the insurer, you can take out temporary business cover for as little as an hour up to around 30 days, alongside your existing cover.
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Yes, business car insurance covers all your social, domestic and pleasure use as well as business-related travel.
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