Business Car Insurance ExplainedTue, 22/08/2017
You probably know that when you take out your car insurance policy, you can choose the type of cover you need. But have you considered whether you might need business car insurance? A standard motor insurance policy covers social use, commuting or both – and commuting is not the same as business use. So how do you know what type of cover you need? Read on to find out more about business car insurance.
Who Needs Business Car Insurance?
If you use your car for business, either occasionally or regularly, then you need business car insurance. This doesn’t include commuting, so if you only use your car to drive to and from your place of work, a regular social and commuting policy is all you need. But if you use your car to go to client meetings for example, or to travel between offices, then you will need business car insurance. Many people use their car for these purposes and don’t realise that they should have business car insurance.
If you don’t have business car insurance, you could find that if you have an accident while using your car for business purposes, you won’t be covered. It’s far better to pay a little extra and make sure you’re protected in every eventuality, than to take the risk of invalidating your insurance policy.
What Do Insurers Need To Know?
When you apply for business car insurance, insurers will need to know information such as:
- The nature of your work
- The amount of time you spend driving
- How many miles you drive for work each year
Your best estimates will be fine if you’re not sure, and this information will be used to calculate your premium.
What Kinds of Business Car Insurance Are Available?
There is more than one level of business car insurance, so you’ll need to pick the one that’s right for you. The terms and conditions may vary between insurers, but generally you can choose between:
- Class 1 – covering just one driver for short distances
- Class 2 – covering many drivers for short distances
- Class 3 – covering cars for commercial use such as door-to-door sales, as well as longer distances.
As the details will differ between each insurance company, check with your chosen insurer to find out which level of cover you need.
Business Car Insurance or Commercial Car Insurance?
Business car insurance is not the same as commercial car insurance. Commercial car insurance is for people who use their cars as part of their job. Class 3 may be fine for salespeople, but any trade for which you use your vehicle to complete your role such as builders, electricians, plumbers, delivery drivers, taxi drivers or driving instructor etc., you will need commercial car insurance for these more specialised activities. Again, check with your insurer to make sure you are taking out the right policy.
Is Business Car Insurance More Expensive?
For insurers, those using their car for business can be considered more of a risk than those using their car for domestic use. This is because those using their car for business tend to spend more time on the road, often in heavy traffic and on unfamiliar routes, so they may be more likely to make a claim. This means that business car insurance premiums can be higher than premiums for other policies.
How Are Business Car Insurance Premiums Calculated?
Your premiums will be calculated based on the factors outlined above such as the level of cover you need and the nature of your work. The type of car you want to insure will also have an effect on the cost of your policy, so if you’re in the market for a new car you may want to take this into consideration. A smaller, more economical car is likely to be cheaper to insure and also cheaper to run. You can also lower your insurance costs by installing extra security devices such as immobilisers, trackers or steering locks, and you could add driving restrictions on the policy such as only allowing drivers over 25 years old to drive the vehicle.
What About Company Cars?
If you have a company car, your employer may have already organised the insurance cover you need. See Be Wiser’s Guide To Company Cars for more information.