Do I need business car insurance?

When business car insurance applies

You need to buy a business car insurance policy if you drive for work-related reasons, or if driving is an integral part of your work, for example when transporting goods or driving passengers (in this case, you need to look at commercial insurance).

Here are some examples of journeys for which you will need basic business car insurance:

Driving from your normal place of work to another work location
Going to client meetings
Travelling away to do training/participate in a conference
Running an errand for your employer

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Types of car insurance

In the UK, business car insurance is essentially the third level of coverage you can opt for when you take out a car insurance policy. The first two types of standard car insurance do not cover driving for work.

Social, domestic and travel (SD&P)

The most basic car insurance, which covers only personal, day-to-day driving. It’s not sufficient for any work-related driving.

Social and commuting

Social and commuting insurance covers personal use of the vehicle (SD&P) and commuting to and from a permanent place of work (which doesn’t constitute business driving and, therefore doesn’t require business insurance).

If you use your vehicle for anything work-related beyond the daily commute, you need to upgrade to business car insurance.

Note: Self-employed people often consider their home their normal place of work. In this case, any work-related travel away from home must be covered by business car insurance.

Business (class 1)

The standard level of business insurance coverage. It will cover travelling between different work sites and to client meetings. It would apply, for example, to cleaners driving between different household or estate agents.

However, if you transport goods or passengers, or provide door-to-door sales, class 1 will not be sufficient.

Business (class 2)

Class 2 offers the same insurance package as class 1, but you can add a named driver to your policy. That could be a co-worker, who also drives for business in the same company. Similarly to class 1, this also does not cover salespeople, taxi drivers or delivery couriers.

Business (class 3)

For frequent business drivers, class 3 is the best option. Consider it if you drive long distances between client locations or provide door-to-door sales across the country. If driving is the main part of your business, you need to purchase commercial insurance.

Commercial insurance

If your business relies on your vehicle, you need commercial insurance. That could apply to:

Taxi drivers
Lorry drivers
Driving instructors

Keep in mind, food delivery drivers or couriers do not fall under this category. They usually have to be covered by special hire & reward (H&R) insurance in additional to a regular policy. Consult your own insurance provider on what the best policy is for your unique situation.

Temporary business insurance

Temporary business insurance can be taken out for a shorter period of time, for example for a one-off business trip. Temporary cover usually provides the same perks as normal insurance, and can be taken out with an existing policy or from a separate insurance provider. You can choose for how long you want to be insured, which can usually be any period of time up to 30 days.

Company car vs personal car

If you drive your own car for work, either as self-employed or an employee, obtaining the correct business insurance is your responsibility.

If you drive a company car owned or leased by your employer, they will normally handle the insurance procedures.

FAQ

Do I need business car insurance to claim mileage?

It’s unlikely that anyone will check whether or not you have business insurance when you make a mileage claim. If you’re going to claim mileage for your vehicle, however, this means you will have used it for business. As such, you should have business insurance.

Do I need business car insurance to drive to work?

No. If you drive to and from work, the social and commuting policy is enough. One thing to note is that the commuting cover only applies to journeys to and from a permanent place of work. If you work in multiple locations or are travelling to a temporary place of work, you will need business insurance.

Do I need business car insurance as a carer?

Professional carers commuting to and from a permanent place of work do not need business car insurance - social and commuting will suffice. If you travel from home or from a permanent place of work to other locations, such as client homes, you will need business car insurance.

Do my employees need business car insurance?

If your employees drive a vehicle for work purposes beyond commuting to and from a regular place of work, they will need business coverage. If they drive their own cars, you should make sure they have the correct insurance.