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If you use your car for business purposes, such as driving to meet customers, you will need specialist business car insurance. Here’s what you need to know about this kind of cover, as well as ways you can keep premiums to a minimum.
Different kinds of business insurance
Normal car insurance will only cover you driving for social, domestic or pleasure reasons. It won’t cover you if your car is used for business reasons, such as transporting goods or driving to meet clients, whether you are self-employed or employed by a company.
This is because using your car for business purposes will usually involve driving much longer distances, often on motorways and during peak periods, and therefore represents a different kind of risk to insurers.
Business car insurance comes in several different classes, depending on exactly how you use your vehicle.
Business use Class 1 car insurance, for example, covers your car for social, domestic and pleasure, as well as any use of their car in connection with their work or business. Most insurers will allow you to include your wife, husband or partner on this type of policy, but would not insure the car for business use for any other named driver.
Business use Class 2 car insurance, meanwhile, usually applies to cars owned by a business rather than an individual, and will cover the car specifically for business use.
The final type of business car insurance, Class 3, covers commercial selling, so would be suitable for people who carry items to sell around in their car, or who travel extensively for work.
Business insurance isn’t the same as commercial car insurance. Commercial policies cover people such as taxi drivers, who are paid for transporting people from one place to another. Couriers would also fall into this category as they are using their vehicle for commercial purposes.
How to keep premiums down
Premiums for business car insurance are more expensive than those for personal motor cover. The reason for this is that business drivers typically cover more miles than those who only use their car for business or domestic use, which means there is a greater chance of them making a claim.
As with any kind of motor cover, insurers providing commercial car insurance will base their premiums on age and driving experience.
The most expensive drivers to insure are young people because they are statistically more likely to be involved in accidents. So if you are including anyone below 25 who has limited driving experience on your business car insurance policy, bear in mind that this is likely to substantially increase the cost of premiums.
One way to reduce the cost of cover is to consider raising the excess, or the portion of any insurance claim which you must pay yourself.
However, remember that the excess must still remain affordable, otherwise you might not be able to make a claim at all.
Always make sure you compare several different business car insurance quotes before buying cover as premiums can vary widely.
MoneySupermarket’s business car insurance channel enables you to compare the cost of a wide choice of policies to ensure you find the right cover at the right price.