Business car insurance and commercial vehicle insurance are terms often used interchangeably. However, they constitute different types of insurance. Business car insurance covers cars used for business use, besides commuting, on top of social, domestic and leisure use. Commercial vehicle insurance is typically used for delivery vans, taxis, trucks and company fleets exclusively for the activities of the business, taken out by the company in question.
Common Policy Coverage
Business car insurance can cover people who use their vehicle for any of the following work-related activities:
- regularly commuting to different locations, such as between work premises, to various offices or sites
- visiting clients regularly
- driving colleagues around, such as to a business site or meetings
- using your car for other tasks related to your work, such as trips to the bank or post office for work purposes or attending conferences or training days.
The specific claims covered by business car insurance depend on the type of policy you take out. Broadly, business car insurance can cover the following:
- breakdown cover
- vehicle recovery in the case of an accident
- loss or damage to your car
- personal accident cover
- damage costs for personal belongings in the vehicle
- coverage when driving abroad, usually up to a specified limit
- access to a hire car if the insured vehicle is in for repair
- cover for windscreen repair and replacement
- lock replacement if your keys are lost or stolen.
Necessary Insurance or Not
If you’re using your car for work-related activities other than commuting, you must have business car insurance in place. Without it, should you become involved in an accident while carrying out a business task, you risk invalidating your existing car insurance policy, leaving you underinsured and liable to cover the cost of any claims. Not only is this a financial risk, but you might be committing a legal offence.
Ordinary car insurance can typically only cover you for social, domestic and personal use, anything from driving to visit friends and family, going to the shops, driving on holiday or visiting the dentist. As many car owners use their vehicle for commuting, many insurers can also cover travel to and from your place of work. However, it’s always important to check with your provider to ensure you have sufficient coverage.
Typically, the leasing company provides insurance with the vehicle, taken out by the company on your behalf.
Business Car Insurance or Commercial Vehicle Insurance
Both types of insurance cover your vehicle for business-related activities. The distinction is on the role the car plays in your job: if your job role directly involves using your motor, such as is the case for delivery drivers or taxi drivers, you typically need a commercial car insurance policy.
If you are driving within working hours but driving is not an intrinsic part of your job role, such as if you could use public transport or take a taxi instead, then business car insurance tends to suffice. If you’re unsure on the type of policy you need, be sure to seek advice from an insurance consultant or broker.
Assessing Extent of Coverage Needed
There are several levels of cover you can choose to take out when purchasing a business car insurance policy. Broadly, there are three classes of business car insurance. These are:
- Class 1 – A Class 1 policy typically covers the driver when commuting between multiple places of work. It’s often a type of plan taken out by those needing to visit clients or customers, such as doctors or care workers who drive to see patients. It’s usually the cheapest form of business car insurance available.
- Class 2 – As an extension of Class 1, this policy typically covers the same as above but allows you to add a named driver, who will also have cover while driving the car. Named drivers generally are colleagues or coworkers. Many insurance suppliers require the policyholder and the named driver to work for the same company.
- Class 3 – This type of policy can cover long-distance driving, relevant to drivers who spend a substantial portion of their working day on the road, such as for door-to-door salespeople. Owing to the high mileage clocked by Class 3 drivers, this type of policy tends to be the most expensive. It’s important to note that Class 3 can cover the delivery of samples, but not the delivery of commercial merchandise.
The class of cover you need depends on which of the above activities are relevant to your work-related car usage. Once you’ve decided on an appropriate type of policy, you need to determine the level of protection you need, from a further choice of three
Cost of Insurance
When it comes to a quote for business car insurance, there’s no one-size-fits-all pricing strategy. The price you pay depends on the risk to the insurer. Each provider will use a range of factors to determine the cost of your business car insurance policy, including:
- details of the person who will be driving the car, including age, driving experience and claims history
- when and where you will drive the vehicle
- how many business and social miles the vehicle will do
- for what activities the car will be used.
Final thoughts and FAQs
When you’re using your car for work, the likelihood is that you’re spending more time on the road than the average car-user. Added to other factors, such as regular driving at peak times and driving in unfamiliar places, and your level of risk goes beyond the scope of an ordinary car insurance policy.
Business car insurance can account for these additional risks and ensure you get the compensation you deserve following an accident, keeping your wheels in motion whatever comes your way.
Still have questions on business car insurance? Check out answers to common related queries, below.
Can I Take Out Temporary Business Car Insurance?
There may be the odd occasion where you want to take your car into work, for a one-off midday meeting at another site or an annual training day. Alternatively, you may borrow a different vehicle for a few working days. Temporary business car insurance can cover:
- borrowing a car for work on a day-by-day basis
- borrowing a colleague’s car to visit clients or other business premises
- travelling to training days or conferences away from your usual place of work
- sharing cars with employees, such as splitting up the driving for business trips
- using a larger vehicle to transport large items or equipment
- borrowing a car when your business car is in for repair.
In instances where you’re using your car, most insurers can offer a temporary business extension to your existing policy, saving you the need to fork out for expensive business car insurance. In the case of using a different vehicle, you can take out a standalone temporary business car insurance policy to ensure you have cover for these events.
Do I Need a Business Car Policy if I Do Voluntary Work?
Typically, insurance for vehicles used for voluntary work functions in a similar way to using cars for business use. Therefore, if you only use your car to commute to and from one place of voluntary work, this is usually covered by an ordinary social, domestic and commuting policy. If you travel to multiple places of voluntary work or drive as part of your volunteer role, you may need business coverage. Contact an insurance consultant or broker for advice.
