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Business car insurance

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What is business car insurance?

If you’re using your car for work - and not just the daily commute - it’s likely you’ll need to add business car insurance to your standard policy.

Business car insurance covers you when you’re using your own car for certain types of work-related driving, for example driving to meetings or between different sites or offices.

This type of driving is considered higher risk by insurers. This is because you are likely to be driving during the busiest times of day, often on unfamiliar roads.

If you’re a courier for a takeaway service or delivery driver then you’ll need commercial van insurance. Taxi drivers will need specialist taxi insurance.

Do I need business car insurance?

If you use your car for work-related purposes on top of commuting to a single place, then you'll need business car insurance.

Examples of work related driving include:

  • Driving to meetings and appointments
  • Sales visits
  • Using your car to get to training courses or company away days
  • Regularly driving to another office or making site visits
  • Running business errands like driving to the bank or post office
  • Driving your colleagues or clients

If you aren’t sure whether you need business car insurance, it’s important to talk to your current insurer.

It’s easy to amend your car insurance for business use and if you fail to arrange it, you might find your existing policy doesn’t pay out if you have an accident whilst doing business related driving. You could also be charged for driving without insurance.

Company car drivers don’t normally need to arrange business car insurance. This is because insurance is likely to be arranged automatically as part of your package - if in doubt though, it’s important to check.

What type of business car insurance do I need?

There are 3 classes of business car insurance. Which one you need depends on how you use your car.

  • Business car insurance class 1 is usually the cheapest type of business car insurance and provides cover if you’re driving to visit customers or between different sites or offices. You might also be able to cover your spouse, if they’re driving the car for your business.
  • Business car insurance class 2 gives you the same coverage as class 1 but you can also add a named driver such as an employee or colleague, who’ll also be able to drive the car.
  • Business car insurance class 3 is usually the most expensive class of business car insurance, these policies will cover you for long-distance driving and for unplanned meetings (commercial traveling). This makes them suitable for traveling salespeople who may also be carrying samples.

How much is business car insurance?

The average price of a policy is £6641 but prices vary depending on a number of factors.

Your own policy price will depend on:

  • Class of vehicle
  • The class of insurance you need and your occupation
  • Your estimated mileage

Your insurance may be more expensive if, for example, you have to regularly drive long-distances, as your insurer might see you as having a greater risk of an accident.

The cheapest policy isn’t always best, but there’s no point in paying for cover you don’t need. Different business car insurance policies will have different levels of cover. This means it’s important to check how much cover the policy you’re considering offers and whether it's at the right level for you.

1 Based on average business use car insurance policies from September 2021 to February 2022

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Can I get temporary business car insurance?

Yes, you can get temporary business car insurance. Short-term business car insurance is flexible, you can take it out for any period of time from 1 hour to 28 days.

This could work out cheaper if you’ll only be needing to use your car for work-related driving on a very occasional basis - for example driving to a corporate weekend away or to attend a training course.

There are a number of insurers that offer temporary business car insurance. Many insurers offer instant cover, so you’ll be able to drive off within a few minutes of finding a policy.

Head over to our temporary car insurance page to find out more.

Who pays for business car insurance?

Usually, your employer will pay for the additional cost of your business car insurance, so it’s worth talking to them.

If your employer doesn’t fully pay for your business car insurance costs, they may contribute towards mileage during working hours.

If you’re self-employed, your business will have to foot the bill.

How much will my employer pay per mile?

It varies by employer, but the standard rates are 45p per mile for the first 10,000 miles and 25p per mile thereafter.

These are the standard rates set by the HMRC’s Approved Mileage Allowance Payment (AMAP) rates and they apply to both cars and vans.

What do the AMAP rates cover?

AMAP rates cover the cost of running and maintaining your vehicle.

This includes:

  • Fuel, servicing and maintenance (including your MOT) and any repairs
  • Car insurance
  • Road tax (vehicle excise duty, or VED)
  • Wear and tear

AMAP rates don’t cover:

  • Motorway tolls
  • Parking fees
  • Congestion charges
  • Other incidental expenses

You can claim tax back on these expenses in addition to the AMAP rate if you can show you’ve made them ‘wholly and exclusively’ for business purposes.

To calculate your business mileage simply multiply the amount of miles you have driven on work related business by the appropriate rate for your vehicle.

It’s important to note that if you have any passengers in the car who work for the same business as you, you’ll be able to claim an additional 5p per mile.

Can I get a tax refund on my business car insurance if I’m self-employed?

Yes, you can get tax relief on your business car insurance if you’re self-employed.

This is because business car insurance is seen as an 'allowable expense’ by HMRC along with:

  • Repairs and servicing
  • Fuel
  • Parking
  • Hire charges
  • Breakdown cover
  • Vehicle licence fees

What details do I need to get a business car insurance quote?

Having the following information to hand will speed up getting a business car quote:

Personal details

  • Your occupation, address and age
  • Any points on your licence as well as the conviction code
  • Previous claims or accidents from the last 5 years
  • Additional drivers you want to add to your policy
  • Details of your no-claims bonus (NCB) in years

Car details

  • Registration number or make and model of your car
  • Any modifications made to the car
  • Estimated annual mileage

How can I get a cheap business car insurance quote?

To keep the cost of business car insurance down, you might want to:

  • Consider using a black box or telematics policy that rewards careful drivers with lower premiums
  • Be accurate with your annual mileage, so you’re not paying for miles you don’t need
  • Install security devices in your car
  • Park your car with security in mind - a locked garage is better than street parking
  • Pay annually rather than monthly
  • Increase your voluntary excess - if you’re willing to pay more towards a claim, you should see your premium fall

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What our car insurance expert says

If you use your own car for work - like driving to different locations - you’ll need to add business use to your policy. When you get a quote make sure to select ‘business use’ to only show policies that include it – this should cover you if you’re driving your car for work reasons.
Alex Kindred signature

Alex Kindred

Car insurance expert