Car insurance for business use – what you need to know…

By Bob Atoo
August 13, 2015

Many people in the UK require a car for work purposes.

By that we don’t mean simply for the daily commute; and thus avoiding the trials and tribulations (delays, strikes and occasional personal hygiene issues which arise when in close proximity to others, in other words) more commonly associated with using public transport.

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And by a different token we’re not referring to couriers, taxi drivers, funeral concierge or pizza delivery drivers who might well use their own vehicle to carry out the fundamental duties of their role, either.  And suffice to say, we’re DEFINITELY not citing Lewis Hamilton and his Formula One colleagues, who need an altogether different level of motor insurance…

Instead we’re talking about those of us who unwittingly use our cars for company business without even acknowledging it most of the time, as baffling as that may sound. Apparently there are as many as five million employees here in the UK who continually risk invalidating their current motor insurance policy by putting their own vehicles into service for what’s rightly deemed to be company business.

You see most private car insurance policies which we have are specifically detailed to cover ‘social, domestic, leisure and commuting’, which is all fair and good if you normally use your car to visit friends, head out to the shops, shuttle the kids to school and ferry yourself to and from your recognised place of work; but should you additionally drive to meet clients and/or transport other members of your core team in the act, then your existing insurance could be rendered null and void if the worst was to happen en route and you subsequently had to claim.

Arranging a dedicated business car policy in the first instance will save falling foul of motor insurance policy T’s and C’s

As any motor insurance provider worth their salt will readily inform you, should you knowingly choose to use your car for ‘business use’, then your standard policy will NOT cover you. That’s for the simple reason that the majority of private car insurance packages offered by the leading providers don’t protect the named insured party for business usage at times when the driver is journeying anywhere other than their usual – and pre-agreed/documented – place of work.

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However – and as proven by insurance industry-collated research – some five million motorists are seemingly driving an average of 188 miles whilst effectively not being covered. Now look at the maths. This 188 miles accumulates to some 2,256 uninsured miles travelled per annum. Or to put it in a more geographical sense, the equivalent of driving from London to Ankara in Turkey give or take the odd mile.

There are various instances which you might not even think about as being classed as business purposes in terms of car usage, and that you otherwise don’t give a second thought about as they’re deemed informal or ad-hoc.

These can habitually include carrying out the daily banking or a run to the local post office on a manager’s bequest, travelling to and from an off-site meeting or training course/away day, visiting a client’s house or suppliers’ address or routinely attending another office.

If, for example, you find yourself ticking off any or all of these instances then it’s fair to say that you’d be considered in breach of the policy’s terms and conditions according to your motor insurer if you were only covered for social, domestic, leisure and commuting. In reality you’d probably remain none the wiser until such time as you were, God forbid, involved in a road accident during one of these unsanctioned company business-determined journeys, whereby any claim you registered thereafter would be refused by your insurer, followed by your policy being made void as a direct result.

Lift-Sharing Could Also Land Motor Insurance Policyholder in Hot Water If They Don’t Abide by the Rules

But of course ALL this can easily be avoided if you arrange a dedicated business car insurance plan if you  use your privately-owned vehicle for company matters whilst in their employ. Business car insurance offers far-reaching protection for a range of scenarios you could find yourself in, from the alluded to travelling between work locations, offering fellow employees lifts and visiting clients off-site to name but a few. What’s more, you could alternatively extend your existing motor insurance policy to accommodate business practice and the cost of doing this isn’t as expensive as you might think. In fact, some car insurance providers have even been known to waiver an additional charge for underwriting this all-encompassing cover at a later date.

Naturally enough, and should you elect for a new business car insurance plan from the off or revise your present policy, there’ll be a number of questions which will need to be satisfied; and as posed by your motor insurer. Questions based around the nature of your employment, the average amount of time you spend at the wheel of your car during the working day and the work-related mileage you accrue during the year.

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Although the last two may be difficult to put precise figures on, a ball-park one will be enough to give your insurer an approximate idea of just how much of your work time will be accounted for when you’re behind the wheel on business. As you could well imagine there’s not just one-size-fits-all, off the shelf business car insurance policy with your name on it awaiting your request, but rather a variety of packages tailor-made to individual requirements.

Take for instance a bespoke business car insurance policy which is flagged up as ‘private and occasional business use’. This specifically covers the named driver or their spouse who only drive for work purposes from time to time, yet still in their own vehicle.

All normal rules of conventional motor insurance apply to business car insurance policy particulars

Elsewhere and the ‘private and business use’ policies pretty much echo the ‘private and occasional business use’ plan, save for the value-added benefit that your car can then be registered to the business itself, allowing cover for any driver.

Meanwhile the ‘commercial travelling’ policies extends to safeguard anyone for whom driving is categorised as a permanent requirement of their role. Unfortunately for these policyholders, premiums will be significantly higher on the grounds that they’ll be spending more of their work time on the roads; thus placing themselves in increased danger and more susceptible to sustaining damage.

It’s worth remembering that it’s not just the amount of time where the insured driver is to’ing and fro’ing on company business that contributes to the premium you’re likely to pay, because (and as with solely private drivers) the type of vehicle the insured owns/drives plays its part in the formulation. Which is why a smaller-engined and more economically-adjusted car tends to make more sense once again. Plus the running costs will reflect the fuel-sipping advantages.

There are a host of other ways to bring down premiums for business car insurance policies too, namely fitting decent security devices (an approved alarm and/or engine immobilising system), steering wheel locks and GPS trackers for a start, whilst ensuring that your car is parked in a secure location overnight (preferably a locked garage or a secure company premises) will pay dividends.

Other obvious similarities between conventional private car insurance and business car packages relate to no claim bonuses, which apply in the same manner as they would normally if you adhere to the orthodox stipulations which govern this universally-recognised premium-reducing incentive.

Don’t run the risk of invalidating existing private car insurance by not adding business cover

And don’t forget, business car insurance policyholders can always recoup monies spent by asking their employers to reimburse them for any business miles racked up in their private vehicles. The amount – although up to the discretion of the individual employer – should be higher per mile than the cost of fuel, whilst the extra is paid with regards to vehicle wear and tear.

According to general statistics made available as of April 2015, the (then) cost considered as a ball-park guide is/was 45p per mile, although expect this to diminish if you cover a large number of miles on a regular basis. At the same time any monies from your own pocket spent on road tolls, as well as any other expenses incurred while on the road for business-related purpose, should also be claimed for and discussed with an employer before undertaking this aspect of the position.

A note of general caution too, would be that whilst some people could wrongly believe that their employer’s insurance covers them for using their vehicle for business it would be in everyone’s best interests to check this beforehand. Despite the fact that some larger companies’ corporate insurance packages are wide-reaching and cover staff in this instance, many more don’t, and at the end of the day it’s the employee’s responsibility to find out what’s what. Our advice would be NEVER to assume that you’re covered.

With more flexible working patterns and multi-location workplaces becoming the norm these days, a sizeable percentage of the working population use their own cars for informal or ad-hoc company business, and like we hinted earlier, more often than not without even being aware of or appreciating the insurance implications.

Likewise, employers for their part shouldn’t assume that their staff are covered on their own private vehicle insurance policies to carry out the duties asked of them, and with this in mind they are legally obliged to ensure that any vehicles used by their staff while on company business are both fit for purpose and fully insured for business use.

Finally, and although not directly related still an important consideration for people using their own vehicles in a variety of work contexts, and the subject of lift sharing often pops up today; thanks in the main to many companies adopting and encouraging a car pool agenda amongst employees so as to cut down on carbon footprints.

In addition to this – and from a commuter’s fiscal viewpoint – car sharing also counters the rising cost of getting to and from work by whatever means necessary/most cost-effective. However a recent report discovered that nearly 10% of fully comprehensive car insurance policies made a point of excluding cover for life sharing, while those that did often confirmed in policy small print that it was subject to certain conditions being met. This typically referred to number of passengers transported and the owner/driver not seeking to make a monetary profit from the endeavour, above and beyond asking for a share of the fuel costs. So again, always check with your motor insurance provider so as to be in receipt of ALL the facts from the outset.

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