Business car insurance class 1
Covers your car if you use it to drive between multiple work locations, or to visit clients or customers. It’s usually the cheapest class of business car insurance
1Accurate as of February 2024.
Business car insurance covers your car if you use it for work. This is different to a standard car insurance policy, which only provides cover for social use and commuting. It’s important to make sure your car is insured at all times, whichever class of use.
Business car insurance: Covers you if you use your car for work-related purposes
Social only: Covers you for everyday driving like going to the shops or visiting friends
Social and commuting: Covers you for everyday driving but also covers your commute to your permanent place of work
It is a legal requirement in the UK to have car insurance, whether you're driving for business or for driving for personal reasons.
If you are using your personal car for business purposes, you will need a car insurance policy that will cover you for business use including:
Driving to the bank or post office for your business
Transporting any business goods or equipment
Using your business to buy a company car
If you don't have cover for business-related driving in your car insurance policy, you may invalidate your insurance and you will be unable to make a claim.
If you are an employee and are driving a company vehicle, it's typical for employers to arrange the necessary insurance on behalf of their employees. However, this isn't always the case, so check with your employer who is responsible for your insurance.
Driving around clients or colleagues as part of your job
Visiting clients or customers
Business trips to company off-site days, or courses, conferences or exhibitions
Making regular visits to other sites or offices
Using your car for work admin like bank or post office visits
It is the business that usually pays for company car insurance. If you are self-employed or own your own business, you are responsible for arranging your business car insurance and paying the premiums. Insurance for a business vehicle is considered a business expense, which means you can deduct the cost of your car insurance premiums from your total payable tax.
If you are an employee using a business vehicle, it's typical for your employer to cover the cost of your insurance. Companies with lots of vehicles will usually take out fleet insurance, which will cover any employees using their business vehicles. However, employers aren't obligated to pay for your insurance when using a business car or van, so make sure you confirm this with your employer before you assume that you're already covered.
Keep it safe and secure: For example, storing vehicles in a locked garage reduces the chances of theft or vandalism occurring
Driving fewer miles means less time on the road, so the less likely you are to be involved in a road accident
Insurers generally charge less if you pay annually rather than in monthly instalments
Pay a higher voluntary excess - as long as you can still afford it – as this shows insurers you won’t bother with frivolous claims
If you can go for a year or more without claiming on your policy, you’ll earn a no-claims discount on future premiums
If you drive your personal car for work - beyond commuting to the office - then you should take out business insurance. Employers will usually ask to see proof your car is insured for business use, or for you to declare that it is, before you make a work trip and they reimburse you for the cost of the journey. If your employer pays the approved mileage rates recommended by the Government, this takes into account the cost of insurance."
If you have a company car, it’s likely you won’t need business car insurance as it should be insured by the company. However, it’s a good idea to check with your employer to make sure you’re fully insured.
Yes, if you use your car for work. Car insurance is counted as a ‘running cost’ of your vehicle, along with petrol, parking fees, servicing and repair costs, so you can claim it as an allowable business expense. You can’t, however, claim the cost of buying a vehicle.
Class 2 business car insurance allows you to add a named driver to your policy.
When you take out business car insurance, be careful about the additional features you choose – they do bolster your cover, but you’ll generally need to pay more for the extra protection. Depending on your provider, you’ll usually have the choice of:
· Breakdown cover, which gives you access to roadside assistance if your car breaks down
· Windscreen cover, which lets you claim for the cost of replacing a cracked or shattered windscreen
· Legal cover, which will pay out for certain legal costs related to a claim by you or another party
· Driving abroad cover, which insures you for taking your car overseas and driving in the EU
· Courtesy car cover, which provides a replacement vehicle for you to use while yours is in repair
· Multi-car cover, which lets you drive more than one car under a single policy
· Personal accident cover, which pays out in the event that you’re injured or killed in a road accident
· Replacement keys, which covers the cost of replacing a set of keys if they’re lost, damaged or stolen
· Wrong fuel, which pays for repair costs if you accidentally top up the tank with the wrong fuel
You would have to disclose the claim, but it wouldn’t affect your no claims discount. It could however affect your premium.
Some insurers may offer temporary or short term car insurance with business usage, but don’t assume this is guaranteed – always ask your insurer beforehand to ensure you have the right cover in place.
If you’re a sole trader, you won’t really have a company car – you and your business are essentially one and the same, so the car will belong to you. Depending on how you use your car for work, you may not even need business car insurance – a regular policy could be enough.
You’ll still be able to claim tax relief as a sole trader, which you can do either using the HMRC’s standard rate of 45p a mile for the first 10,000 miles and 25p thereafter, or you can work it out exactly.
You will need business car insurance if you're claiming mileage. This is because claiming back the cost of driving means you're driving for work purposes, and to legally be covered by car insurance you'll need a business policy.
Whether or not one option is cheaper than the other depends on how often you use your vehicle for business. If you are using your car on a regular basis for business – at least once a week – then it may be worthwhile to add business use to your normal car insurance policy. This will increase the cost of your monthly premiums, but your insurance will be easier to manage and may work out cheaper than purchasing a brand new business car insurance policy.
If you are only occasionally using your car for business, then you have the option of taking out a temporary car insurance policy. These policies give you short term cover for a day, a week, or a month, making them a cheaper option for one-off business use.
Fleet insurance and business car insurance are similarly used to insure business owned vehicles, but the two insurance products have very different purposes.
Fleet insurance is a type of vehicle insurance that will cover a large amount of vehicles under one policy - usually vans used for delivery. Providers can cover anywhere from two to hundreds of vans with just one policy.
Business car insurance, on the other hand, doesn't cover delivery of goods and typically is used to cover only a few vehicles per policy. Drivers also usually have to be named individually on business car insurance policies, whereas fleet insurance is normally bought with any driver van insurance which allows employers to provide insurers with a list of drivers to cover.
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