Car cover for the self-employed

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How many people still work from nine-to-five in the same office every day?

Even Dolly Parton, famous for her working hours anthem, didn’t finish her recent Glastonbury gig until nearly 6.00pm.

Work-life flexibility is increasingly to the fore these days, and fewer people than in the past are locked into the traditional routines. And the number could rise following the recent introduction of new rules enabling people to request more flexible working patterns.

Not only do modern employment schedules and requirements tend to take account of our changing lifestyles, more people are actually working for themselves.

You might, for example, run your own business, or maybe you are self-employed.

Don’t forget car cover

There’s lots to think about when you set up on your own, so it’s perhaps not surprising that many people overlook car insurance.

Yes, car insurance. It seems an unlikely entry on your to-do list, but if you are self-employed or run your own business you should check that you have appropriate cover for your car.

A standard motor policy covers the vehicle for social, domestic and pleasure use only. So, if you drive to the shops, a friend’s house, or the park, you are insured.

At a pinch your policy will also include the commute to a regular place of work, as long as you drive to and from the same place.

Additional protection

But that’s about it. If, for example, you are a mobile hairdresser and visit clients in their own home, or if you bake and deliver cakes or travel to different locations to visit customers, your car is unlikely to be insured.

In other words, if you are involved in an accident and make a claim while you’re driving for business reasons, your insurer might not (in fact, probably will not) pay out.

And if your insurer will not pay out, you will have you have to put your hand in your own pocket. That would potentially cost you thousands of pounds.

You might also end up on the wrong end of a charge for insurance fraud.

Do the business

All in all, it’s wise to arrange the right policy for your car, which usually means specialist business car insurance.

But don’t panic. Just because it’s a business insurance policy, it doesn’t mean it’s going to be horrendously complicated and hideously expensive – although it will cost more than a pure private-use policy.

When you apply, you simply fill in a quote request in the usual way, but when it comes to the question about how the car will be used, you tick the box that says ‘business use’.

You’ll then be asked how many ‘personal’ and ‘business’ miles you do each year. The more business miles you do, the more the policy will cost.

Levels of cover

There are different levels of business cover and you should choose the most appropriate for your needs.

If you drive the vehicle for business purposes infrequently, a policy that covers private and occasional business use will probably be adequate. Some firms include cover for a spouse, but it’s worth checking the details.

Private and business use is a step up and is aimed at people who regularly drive their car for business. Most policies also allow you to add a colleague as a named driver, even if they live at a different address.

Then there’s commercial car insurance, which is really for people who rely on their car for their business, perhaps for deliveries or a taxi service.

Kit & caboodle

If you carry equipment or tools in your car, make sure you understand the conditions of cover. Some car insurers will not insure your kit; others will impose a claim limit.

There will also almost certainly be a raft of exclusions. For example, the policy would be unlikely to pay out if the equipment was stolen while the car was left unlocked or unattended.

In addition, the insurer might insist on certain security measures, such as alarms and immobilisers.

Why the cost differential?

Business car insurance is typically more expensive than standard car cover because business users tend to drive more miles and at busier times than ordinary motorists, so lodge more claims.

You can cut the cost of cover by limiting the number of miles and by building up a no-claims discount – just as you would with a standard policy.

Most insurers will also allow you to negotiate a bigger excess (the amount you pay towards any claim you make) in return for a lower premium.

Taken into account

If you use your car for business purposes, make sure you talk to your accountant about writing-off your expenditure against your profits, as appropriate.

He or she will be able to discuss your business funding the depreciation of the vehicle’s value, and booking a proportion of running costs, including insurance premiums, as business expenses.

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