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
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1Accurate as of February 2023.
Business car insurance covers your car if you use it for work. This is different to a standard 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
If you use your car while working, you need business car insurance. If you’re involved in an accident while using your car for work and you haven’t bought business car insurance, you will be unable to make a claim – and you may be committing an offence.
When you're driving out and about on the clock, your insurance should be on the business.
Driving for business purposes = Business car insurance
Business use car insurance comes in several different classes, depending on what level of cover you need:
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
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
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
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.
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:
Driving around clients or colleagues
Visiting clients or customers
Travelling 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
Making regular deliveries of goods
Being a taxi driver
Being a driving instructor
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) | £600.50 |
Social only (SD&P) | £576.54 |
Business use by the policyholder | £447.40 |
Business use by the policyholder and their spouse | £335.37 |
Business use by the policyholder's spouse | £344.91 |
Business use by any driver | £617.54 |
*Based on fully comprehensive policies with the main driver holding a full UK driving licence. MoneySuperMarket data collected between November 2022 and February 2023, accurate as of March 2023
Here are a few ways you could reduce the cost of your business car insurance:
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
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 for work, it’s likely that you spend a lot of time on the road, meaning there is more risk of you being involved in an accident. Although it can be more expensive, business car insurance can give you the cover you need should anything happen, plus peace of mind.
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Our mission is to make finding cheap car insurance easier – and when you take out cover with MoneySuperMarket you can benefit from:
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
Our car monitor gives you reminders on your road tax and MOT, as well as showing your MOT history and car valuation – helping you stay up to date, so you never miss a renewal
Our live chat tool is there so our experts can guide you through the car insurance question set, offering tailored support during business hours to help you get the right policy for the right price
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.
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