Car insurance classes of use explained

Social, business or commercial? Car insurance policies come in a variety of types.

When buying car insurance, the insurer should ask how you plan on using your vehicle. This affects the class of use of your insurance policy and its cost. So it's important you declare the correct information and stay honest with your insurer.

But what classes of use are there and how do they impact your car insurance policy?

Elderly driver behind the wheel of their car

 

What are the different classes of use?

When you buy car insurance, you need to accurately describe how you use your car to determine its class of use. Broadly speaking, there are 6 classes of use and these could affect the price you pay:

  • Social-only
  • Social and commuting
  • Class 1, 2 and 3 business
  • Commercial

If you incorrectly describe how you use your car, you could be underinsured. This means your insurance company could refuse your claim.

Of course, you don’t want to break the bank, but you don’t want to be underinsured, either. So, it’s important to be accurate.

Ask yourself, do you need cover just for visiting family and friends? Or do you drive to work and leave your vehicle in a public place?

Do you only drive for work part-time? Is the role temporary? There are a few variations to keep in mind when it comes to driving for business.

And don’t forget, the usual comprehensive and third party, fire and theft options are available in each insurance category.

 

Social-only – also known as social, domestic and pleasure (SDP)

Social-only cover is more generous than it sounds. It’s also known as social, domestic and pleasure or ‘SDP’.

Social use covers all non-work driving. This generally includes shopping, day trips and holidays, plus visits to friends and family.

If you think you're going to include the odd trip to the office, then you might want to consider social and commuting.

 

Social, domestic and pleasure including commuting (SDP+C)

This SDP+C car category offers additional cover for 1 single place of work. You also get social cover to for your time away from work.

If you drop someone off at a railway station on the way to your job, this should be included in your cover.

If you drive to the train station and then hop on a train to work, you should also be covered here.

The ‘commuting’ bit here is important. By driving to a train station and dropping off your car in the car park, you’re leaving it in a public place.

This is compared with, say, locking it up outside your home.

While the above distinctions look slight, it could be a big deal for insurers because the risk rises.

So where possible, always give be honest and keep the risk of invalidating your policy down.

If you’ve several different workplaces or drive long distances crisscrossing the country for work, this type of cover isn't enough.

 

Business use

Many of us need to drive for work but working life arrangements on the road might vary.

If your job means visiting clients across several sites – perhaps in a healthcare worker role – you might come under business use cover.

Your job might also mean you need to drive colleagues or clients around from time to time.

Lots of us also have part-time jobs or side hustles, and the driving demands around them could vary.

So, there are a few different business car insurance classes to cover all eventualities.

If you drive your car for work, you might be able to offset some of the running costs by claiming a mileage allowance.

So, keep a record of these costs, just in case HMRC needs to check – even if you’re not self-employed.

If you do use your car for your job, check with your employer about their obligations. Any car used for company work must be fully insured, as well as insured in the right class, by whoever owns the vehicle.

 

Class 1 business car insurance

This is the most popular business car protection as it covers a range of basics. You’re also covered for social, domestic and pleasure as well as driving to and from work.

It means you should be covered for short business trips between different sites.

So, if you’re a freelance musician doing a few monthly gigs, for example, this should cover you.

Some business car insurance policies might also cover your spouse. But it’s worth checking to make sure beforehand.

If you’ve any named drivers on the policy, they might not be covered any business-related use.

This type of cover doesn’t usually include door-to-door sales work or deliveries where lots of stop-start driving is common.

 

Class 2 business car insurance

For extra business driving protection, class 2 includes named drivers on your policy. This means that adding a co-worker, for example, is straightforward.

You’ve also got all the benefits of Class 1 included. Named drivers must use the vehicle for the same business as the policyholder.

 

Class 3 business car insurance

If you’re on the road a lot as part of your job, your class of use may come under class 3 business.

Class 3 business use provides cover for long-distance driving and light goods transportation, as long as it's part of your job.

As an example, this cover might be right for sales professionals driving long distances.

This cover might also be right for those who visit multiple clients a day, such as community healthcare workers. Or perhaps building inspectors and architects driving across the country for site visits.

But class 3 business use might not be suitable for minicab drivers, delivery drivers or driving instructors. These driving professions need commercial insurance, which sits in a specialist category.

If you’re driving patients or their relatives in a work role, you might need commercial insurance too. This category includes part-time commercial driving.

 

Commercial

Quite a lot of commercial travelling policies cover areas that might overlap with business use insurance.

So, it’s especially important to check the small print with commercial car insurance. Some insurance providers define it in a different way, which could confuse things. If in doubt, get in touch with your insurance company.

Commercial travelling cover could be an option if you’re on the road most of the day carrying people or goods for your work.

This cover generally includes driving instructors or taxicab drivers. There’s usually a great deal of stop-start driving involved.

If you’re transporting goods, insurance companies often label this as courier insurance, which often involves light vans.

 

What happens if I drive without the proper class of use on my policy?

Declaring the wrong class of use on your policy risks invalidating any future claims, or even the policy itself. If you've deliberately misled your insurance company for a cheaper car insurance price, it could even be considered to be committing fraud.

If you start to use your car for work purposes, make sure you contact your insurance provider. Let them know in advance and make changes to the policy if you need to.

It also works the other way. If you’re working from home more, then your risk might be less. This could help lower your insurance costs.

While it might seem picky, it stands to reason that accidents involving business use tend to be more expensive compared with social-only use.

More miles and more time on the road simply mean a higher chance of accidents – and more risk.

So as a broad principle, be honest and accurate with how you use your car, and update your policy if your circumstances change.

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How can I lower the cost of my car insurance?

Start by making sure you have the right class of use and then take a hard look at any extras.

Here are 8 ideas that could slash your car insurance costs further:

  • Do you really need the policy with a load of add-ons including breakdown and legal cover? A more basic package where you pay separately for your car insurance extras could work out cheaper.
  • Can you lower your annual mileage limit, say from 12,000 miles a year to 10,000 miles? Perhaps even lower. Lots of us are working more from home these days. Remember it's important to be accurate with your mileage, though.
  • If you’re a young driver, are you still using a black box policy? Some telematics policies could end up being more expensive once all the fees and charges are added. Standard insurance could be cheaper for some after a while. Why not compare car insurance policies and see for yourself?
  • Could you pay your insurance costs up-front in full, rather than in monthly installments? If you pay monthly, you generally pay more overall. If you’ve got some savings tucked away, why not pay it off in one go?
  • Have you added any modifications? Insurers tend to increase policy costs on modified cars. Even go-faster stripes could ramp up your costs. So, try and rein in your inner racer.
  • Try renewing your insurance around 3 weeks before your policy runs out. If you renew the day before you could pay more. Being more organised tends to see the biggest reward in terms of your insurance costs.
  • Keep your car parked in a well-lit, secure area off the road. The better your car security is, the harder your car is to steal and so the lower your costs could be.
  • Check your job title. Some insurance providers have higher costs for certain occupations, which is reasonable enough. It’s not all about where you live or the car you drive. But if you’ve got a job an insurer considers ‘high risk’, there might be an alternative title that more accurately reflects your role.

For more tips, check out our guide on how to lower the cost of your car insurance.