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Business car insurance

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What is business car insurance?

Business car insurance covers your car for work use. So, if you use your car for work trips on top of your daily commute, then you’ll probably need business insurance.

If you’re a courier for a takeaway service or delivery driver, then you’ll need commercial insurance. Taxi drivers will need specific 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 business car insurance is probably for you.

Cover includes:

  • Driving work colleagues or clients around
  • Using your car to get to training courses or company away days
  • Regularly driving to another office or site visits
  • Using your car for work-related tasks such as driving to the post office or bank
  • High mileage for work purposes. If driving thousands of miles for work is a regular thing, you’re better suited to this rather than a standard policy

What type of business car insurance do I need?

There are 3 types of business car insurance to choose from:

  • Business car insurance class 1 covers your car if you use it between many workplaces, or to visit customers. Usually, it’s the cheapest class of business car insurance.
  • Business car insurance class 2 gives you the same coverage as class 1 but allows you to add a named driver or co-worker who’ll also be insured to drive the car.
  • Business car insurance class 3 which covers long-distance driving. It is the most expensive class of business car insurance.

How much is business car insurance?

The cost of business car insurance varies with the average price of a policy being £7001

Your own policy price will depend on:

You might have higher premiums, for example, if you have to regularly drive long-distances, as your insurer might see you as having a greater risk of an accident.

1 Based on average business use car insurance policies from 1st August 2020 to 16th September 2021

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Can I get temporary business car insurance?

Yes, you can get temporary business car insurance, and it might be worth getting if you plan to use your car for business use. Short-term business car insurance is flexible, you can take it out for any period of time from 1 hour to 30 days.

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 your business car insurance, but it’s worth checking first.

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

How much will my employer pay per mile?

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

These are the standard rates for 2020-21, set by the HMRC’s Approved Mileage Allowance Payment (AMAP) rates.

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.

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

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

Business car insurance is seen as an ‘allowable expense’ by the 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:

  • Choose a fuel-efficient car if you haven’t bought a car already
  • Be accurate with your annual milage, so you’re paying for miles you’re driving
  • Install security devices in your car, park in secure facilities like a garage overnight, not on a driveway
  • Pay annually if your employer is okay with it as it’s cheaper than paying monthly
  • Increase your voluntary excess as if you’re willing to pay more towards a claim, you should see your premium prices drop

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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