Business car insurance explained: What you need to know

With so many different types of car insurance policies on the market, it can be tricky to know which one is best for your particular needs, especially if it’s your first time taking out a specific kind of policy. This is often the case for those shopping for business car insurance, so we’ve put together a quick and simple guide to help you understand the ins and outs of business car insurance policies.


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Regular car insurance policies usually cover the car for general domestic use as well as a commute to and from a single place of work. However, if you use your vehicle excessively as part of your job, it’s quite likely that you’ll need a business car insurance policy to cover any potential issues the vehicle may encounter.

This is because vehicles used for business purposes quickly build up their mileage, and have a higher risk of damage or collisions, and could be driven by more than one driver. In instances such as these, you’ll almost certainly need car insurance for business use.


How much is business car insurance?


Business car insurance policies are usually more expensive than standard insurance policies, mostly due to the increased risk involved with these vehicles. Covering more miles often at peak times in areas unfamiliar to the driver, business vehicles are statistically more likely to be involved in a collision, or sustain some kind of damage or breakdown due to wear and tear. This is why business car insurance premiums are higher than most standard policies.

In some cases, policy holders may be tempted to ‘bend the truth’ in order to reduce the cost of their insurance premiums, but this really isn’t worth the small savings you’ll make. If a collision or incident should occur and the details on the policy are found to be false, the insurance becomes void and you’ll be left with a large bill and no coverage.

When registering car insurance for business use, you’ll encounter the usual questions you’d come across when setting up a standard policy, such as detailing your age, postcode and car details. However, you will then face a new set of questions specific to business car insurance, such as details about your business or vocation, as well as when, where and why you drive the car for work purposes.


Types of business car insurance


There are several classes of business car insurance, which affords some flexibility to customers who need a policy that fits their specific usage.

  • Sole driver

    This provides the same cover as the business policy covered above, and also extends the coverage to an additional named driver, such as a spouse or co-worker.

  • Named driver

    This provides the same cover as the business policy covered above, and also extends the coverage to an additional named driver, such as a spouse or co-worker.

  • Commercial travel

    These policies are typical of a driver who drives as a permanent aspect of their job, such as taxi drivers or couriers, and extends the coverage for more excessive use. It’s important to note that a car used for business and a company car are different; a company car should be insured by the company that owns or rents the vehicle you are using, and should not come at an additional cost to you.

  • One day business car insurance

    If driving your car for business is not a regular situation, you can opt for temporary insurance for business use, ranging from one hour to 30 days.


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Frequently asked questions


Business car insurance can cover a broad range of uses, including travelling for work and visiting clients.

Conventional car insurance, on the other hand, can only cover you for social, domestic, and personal use, such as visiting friends, shopping, or taking a weekend trip. While many insurers will also cover your car if you’re commuting to work, it’s crucial to check with your provider to ensure you’re not under-insured.

You’re generally responsible for paying for your own business car insurance, but some companies offer their employees financial supplements, so it’s best to check with your employer. Although you'll tend to pay higher premiums for business car insurance, there are ways to keep costs down, such as paying annually, increasing your excess, and driving carefully.

Business use car insurance comes in three classes, depending on the level of cover you need. These are:

Business car insurance class 1 covers your car if you drive between multiple work locations or visit clients or customers. It’s usually the cheapest class of business car insurance.

Business car insurance class 2 provides the same coverage as class 1 but allows you to add a co-worker as a named driver, so they’ll also be insured to drive the car. It’s likely to be slightly more expensive than class 1.

Business car insurance class 3 covers long-distance driving as part of your business use and is the most expensive type of business car insurance.


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