Dog Walker Van Insurance: 5 Questions Answered
Should You Have Business Use Car Insurance?
Last modified:What’s the difference between standard vehicle insurance and insurance for business use and which applies to you?
Do you drive your car for business related activities other than just your standard commute? This can include driving to meetings, driving to different sites or even just running errands.
Many UK drivers are driving without the correct insurance, simply because they don’t understand what constitutes ‘business use’.
There is a difference between standard vehicle insurance and vehicles insured for business use. It’s important to make sure you have the right one depending on your use of your vehicle.
Standard vehicle insurance – the facts
Standard vehicle insurance covers use for ‘social, domestic and pleasure’ driving only.
Standard vehicle insurance will cover your standard commute to and from work, but that is all. Some insurers specify that you need a ‘social, domestic, pleasure and commuting’ if you are using your vehicle to drive to work, so it’s always a good idea to check this with them direct.
Top tip: For tax purposes, commuting to work does not count as business mileage, it is a cost to you and as such, is not tax deductible.
Business use car insurance – the facts
If you are able to claim mileage or car allowance from your company, chances are you will need to insure your car for business use.
Vehicle insurance for business use covers you if you use your car to visit customers, to drive between business locations, to drive to meetings or for any other driving on behalf of the company, such as running errands, picking up clients, delivering goods etc.
There are 3 main types of business use car insurance policy:
Class 1 – Covers business use by you
This covers you to drive in relation to your work for any of the reasons listed above.
This covers you to drive in relation to your work for any of the reasons listed above.
Class 2 – Covers business use for other drivers
The same as Class 1 but with the benefit of being able to add additional drivers to the policy, for example colleagues.
The same as Class 1 but with the benefit of being able to add additional drivers to the policy, for example colleagues.
Class 3 – Covers commercial travel
This is designed for people for whom driving is a permanent part of their job and so spend a lot of time on the road.
This is designed for people for whom driving is a permanent part of their job and so spend a lot of time on the road.
Insurers will ask various questions concerning the nature of your work and estimated mileage in order to determine which business vehicle insurance policy if best for you.
Why does it matter?
It might seem unfair and just another way for insurance companies to rinse drivers of more money, but there are statistics that back up the need to separate standard vehicle insurance from business use vehicle insurance.
There is a significant rise in the collision rate between those who solely use their car for social use and those that use it for business related travel. This makes sense, since if you are using your car for work, chances are you will spend more time behind the wheel. More time on the road and higher mileage equates to greater risk and so it stands to reason that insurers would charge more for this type of policy.
Worst case scenario
Only having standard car insurance when you should have business use insurance could invalidate your policy in the event of a claim and even lead to prosecution for driving without insurance.
A IN10 driving violation, which is driving without insurance, is a criminal offence and is understandably, particularly frowned upon by insurers. If you lose your driving licence due to this or other driving offences, you will need convicted driver insurance when you return to the road.
Top Tip: Standard vehicle insurance and car insurance for business use, are invalid if you are using your vehicle for financial gain. Therefore insurance for business use doesn't cover taxis or chauffeurs, for these you would need either a public or private hire policy.
If you ever do accept money for giving someone a lift or car sharing, make sure the amount only covers fuel and other running costs.
You can read our guides on taxi insurance and convicted driver insurance to find out more about these types of vehicle cover and to determine the precise type of policy applicable to you.
