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Business car insurance

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What is business car insurance?

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 

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What type of business car insurance do I need?

There are different types of business car insurance that offer different levels of cover. Business car insurance already includes cover for any personal, social, or domestic use of your car. However, the cover you get for business driving isn't always the same.

Business use car insurance comes in several different classes, depending on what level of cover you need. These three classes define how your vehicle is used by your business:

  • Marker-Number-1-50x50

    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

  • Marker-Number-2-50x50

    Business car insurance class 2

    Grants the same coverage as class 1 but allows you to add a named driver – a co-worker who will also be insured to drive the same car

  • Marker-Number-3-50x50

    Business car insurance class 3

    Covers long-distance driving as part of your business use. Class 3 insurance is the most expensive, but it might be necessary if you’re a door-to-door salesman, for example

Do I need business car insurance?

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.

What is the difference between business and commercial car insurance?

It's important to remember that commercial car insurance is different from business car insurance.

  • Commercial car insurance covers people who use their car as an integral part of their job – such as taxi drivers, delivery drivers or driving instructors. 

  • A standard car insurance is similar to a business one, however a business car policy makes it legal for you to drive for work which is not included in a standard policy.

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.

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What does business car insurance cover?

A business car insurance policy should offer the same coverage as standard motor insurance, depending on the level of cover you take out. However, they’ll also offer protection for using your car in a variety of business-related circumstances where a standard policy won’t:

  • Tick

    What’s covered

    • 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

  • Cross

    What’s not covered

How much does business car insurance cost?

The amount you’ll pay in premiums for business car insurance will depend on a range of factors, including:

  • Who is driving the car: Whether there are one or multiple drivers, their age, and their claims and convictions history will all be considered

  • What the car is used for: The number of business and social miles you can estimate the car will do, as well as what you’ll be using the car for in your business

  • When and where the car is driven: Your location and the estimated time of day you drive can also influence your premiums 

  • The type of car it is: The make and model of your car, and which insurance group it’s in, is an important factor

Usage Type

Average annual premiums

Social and commuting to a single place of work/study (SDP&C)

£830.40ii

Social only (SD&P)

£767.65ii

Business use by the policyholder

£658.39ii

Business use by the policyholder and their spouse/civil partner

£564.10ii

Business use by the policyholder's spouse

£578.36ii

Business use by any driver

£826.62ii

Example quote when comparing business car insurance

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Churchill essentials

  • Annual Price

    £448.27

  • Cover

    Fully comprehensive

  • Excess

    Total £450, Compulsory £200, Voluntary £250


Great for

  • Courtesy car: comes as standard
  • Personal injury cover: comes as standard
  • Windscreen cover: comes as standard

But be aware that

  • Legal cover: available from £28
  • Breakdown cover: available from £30

This is for illustrative purposes only. If your circumstances and cover needs differ, your quote may be more or less expensive than the above example.
Learn more about our full methodology here.

Who pays for business car insurance?

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.

How to get cheaper business car insurance

Here are a few ways you could reduce the cost of your business car insurance:

  • 1

    Choose the right car

    Pick a car in a lower insurance group, as they’re safer on the road and cheaper to cover. Check what group your car is in with our car checker tool

  • 2

    Keep it safe and secure

    Keep it safe and secure: For example, storing vehicles in a locked garage reduces the chances of theft or vandalism occurring

  • 3

    Keep your mileage low

    Driving fewer miles means less time on the road, so the less likely you are to be involved in a road accident

  • 4

    Pay annually

    Insurers generally charge less if you pay annually rather than in monthly instalments

  • 5

    Pay more excess

    Pay a higher voluntary excess - as long as you can still afford it – as this shows insurers you won’t bother with frivolous claims

  • 6

    Build a no claims bonus

    If you can go for a year or more without claiming on your policy, you’ll earn a no-claims discount on future premiums 

What our customers say

Based on 86,549 reviews 4.7/5 of our customers would buy from us again
Finding a car insurance was easy and quick found one which covered all my needs and its was over £200 cheaper then the company I was with . Every happy with who we went with and easy to contact they by phone as well
From all the comparison sites, money supermarket have the most competitive quotes. Easy to use.
quickly, efficiently, without leaving home, insurance calculation made, I chose half the price cheaper than the current insurance company offered me for the continuation. I recommend.
Sarah Tooze

Our expert says

"

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.

"
- Sarah Tooze, Car & Van Insurance Expert

What do I need to get a quote?

To get a quote for your next business car insurance policy, there are a few pieces of information that you should have on hand. This will make the process quick and easy and also fetch you accurate prices for the policy you want.

  • car icon

    Business car information

    You will need to give some basic information about the vehicle, including the make, model, and registration as well as information about the vehicle's value and when you purchased it

  • person icon

    Personal information

    You will need to provide some basic information about yourself and any other drivers you want the policy to cover, including their name, date of birth, and occupation

  • car document icon

    Driving licence information

    You need to at least have a provisional driving licence to be covered by a business car insurance policy and providing your licence number may reduce your policy price

  • halt icon

    Previous convictions

    You will need provide information to your insurer if you or your named drivers have had any recent motor accidents, committed any driving offences, or have unspent convictions

Why compare business car insurance quotes with MoneySuperMarket?

Our mission is to make finding cheap car insurance easier – and when you take out cover with MoneySuperMarket you can benefit from:

  • icon-Business-110x110

    Business cover tailored to you

    We’ll search the market for quotes that match your requirements – so you can find a policy that covers you for all the business and personal miles you need to drive

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    Save Time & Money

    For free, compare tailored quotes in minutes and find the cheapest deal for you. If you find the same deal for less, we'll price match* and give you a £20 gift card.

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    Trusted

    We're trusted by our customers. We only work with insurance providers authorised and regulated by the Financial Conduct Authority (FCA).

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.

Your business car insurance policy should also offer cover for social, domestic and pleasure use as well as commuting.

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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