Car insurance for business use: What you need to know

A business man getting out of a car

October 8, 2021

If you use your car for commuting to specific locations for work or for general business purposes, you might want to consider whether you need to add business insurance to your car.

Using your car for personal use only won’t require business car insurance, but if you run a small business that requires you to use your car for tasks relating to your work, then a specific business car insurance policy might be something you need.

In our guide to business car insurance explained, we take you through everything you need to know, including how much it costs to add business use to car insurance and what it covers you for.

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What is business car insurance?

In the simplest terms, business car insurance covers you if you use your vehicle for work purposes.

Most standard car insurance policies offer social only cover (which covers you for everyday driving such as using your car to visit friends and family or for driving to the shops) or social and commuting cover which covers you for regular, everyday driving, but also for commuting to and from work.

Business car insurance, on the other hand, is a more specific policy that covers you if you use your car for specific work purposes.

What does business insurance cover on a car?

There are three different classes for business insurance and if you use your car for work purposes, it’s imperative that you have business cover in place - otherwise, you could run the risk of not being covered if you’re involved in an accident and need to make a claim and you could even be committing a driving offence.

As with any type of car insurance, you can get third-party only cover, third-party fire and theft and comprehensive cover for business insurance, depending on the level of cover you want.

Business car insurance comes in Class 1,2 and 3 ratings and it depends on the level of cover you need as to which class you will need.

Business car insurance Class 1

This is usually the cheapest type of business car insurance and will cover you for driving between numerous work locations or for driving between different client meetings.

Business car insurance Class 2

Class 2 business car insurance is the same as Class 1 but it allows you to add a named driver to the policy, such as a co-worker who will also be insured on your vehicle for business purposes.

Business car insurance Class 3

This type of business car insurance is the most comprehensive and therefore usually the most expensive and it covers long-distance driving for business purposes, such as if you’re a door-to-door salesperson.

Is business car insurance more expensive?

Business car insurance is generally perceived to be more expensive than regular car insurance as motorists with business car insurance usually pose more of a risk due to them driving more miles than regular drivers and they are also likely to drive at busier times on the road, so they’re considered to be more at risk of being involved in an accident.

How much is business car insurance?

The cost of business car insurance depends on several factors such as the level of cover you need, the type of car you’re insuring, driver history and of course, the insurance provider itself.

Cheaper cars such as a Ford Focus or Ford Fiesta are usually cheaper to insure for business purposes as opposed to BMW and Audi cars, for example, but it depends on other factors as well, so it’s important to compare several quotes from different providers to find the best and most affordable cover.

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What's the difference between private and business car insurance?

Private car insurance is usually only for social, domestic and pleasure purposes, such as if you only use your car to drive to shops, friends or family member’s houses or to drive to recreational activities. Whereas business car insurance is for the sole purpose of using your car for work purposes.

Do I need business car insurance?

Take a look at some of the most common reasons for needing business car insurance below to see if it’s something that you might need:

  • If you drive thousands of miles for your work.
  • If you regularly commute to and from different client or customer meetings or to different work locations.
  • If you drive colleagues around to different work locations.
  • If you use your car to make deliveries or for collections for your work.

What affects the cost of business car insurance premiums?

When determining the cost of premiums for business car insurance, insurers will take into account factors such as your job, your average annual mileage, where you live, any previous driving convictions you have, your age, where you park your car overnight, how much voluntary excess you’re willing to pay, your driving history and more. 

The cost of your business car premiums may also be affected by factors such as who will be driving the car (do you need to add another named driver to the policy?), what the car will be used for, when and where it will be driven and how many business miles it’s expected to do.

You might like: How is car insurance calculated?

How to get cheaper business car insurance

Car insurance certainly doesn’t come cheap, especially when it comes to business cover, but it is a good idea to have a solid insurance policy in place to ensure that you’re well protected.

If you’re thinking about getting business car insurance for work purposes, take a look at some of the ways that you can reduce the cost of your premiums below.

  • Drive fewer miles.
  • Pay annually rather than in monthly instalments (paying monthly usually incurs interest rate charges).
  • Consider paying a higher voluntary excess, providing that you can afford to pay it if you need to make a claim.
  • Keep your car as safe as possible by ensuring it’s locked with all the windows up and store it in a safe place at night such as in a locked garage.

Get a great deal on your car insurance with a quote from Bobatoo…

The best way to save money on your next car insurance policy is to compare quotes online, rather than let your current policy simply auto-renew.

If you wish to stay with your current insurer, it's still worth comparing quotes because if you find a new quote that's much cheaper but with a different provider, your existing insurer may match that quote or do a cheaper deal for you as they won't want to lose you as a customer.

Get a quote today to see how much you could be saving on car cover:

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