Using your car for business purposes – will a standard car insurance policy cover you?
If you work for a small business or run your own company, and you regularly use your personal vehicle for work, you might assume that your existing car insurance policy is enough to cover you should you be involved in an accident or your car is damaged or stolen.
However, this might not be the case, because in order to be insured to use your own vehicle for business purposes your policy would need to feature a ‘class of use’ that insured you to drive the car for business journeys.
What are ‘classes of use’?
What you use your car for can affect the level of risk you represent to the insurer – for instance, a salesperson who uses their car for business purposes is likely to clock up many more miles than someone who has a ‘social, domestic and pleasure’ class of use, and that additional mileage can increase their odds of being involved in an accident.
The main classes of use for car insurance are:
• Social, domestic and pleasure
• Social, domestic, pleasure and commuting
• Business class 1
• Business class 2
• Business class 3
If you plan to use your own car for business trips you would need to choose one of those three business classes of use when you’re taking out the policy, although which one you go for will depend on the type of business driving you plan to do.
Understanding business classes of use for car insurance
The three classes of business car insurance all cover the policyholder to drive the vehicle for social, domestic and pleasure purposes, but differ on how the vehicle can be used for business journeys.
● Class one - This level of business car insurance provides cover for driving between various places of work and occasional travel to meet clients, but doesn’t extend to delivering samples or door-to-door sales. It is well-suited to people such as care workers who have to pay regular visits to patients. Named drivers usually can’t be included, although some providers might allow the policyholder to include their spouse.
● Class two - The same level of cover as class one business car insurance, with the added benefit of being able to include additional named drivers on the policy. Most providers require that extra named drivers work for the same business as the principal policyholder. Delivering samples and door-to-door sales still aren’t covered.
● Class three - The highest level of cover, class three covers the policyholder for unlimited long-distance travel with no set destinations, making it a good option for salespeople. It generally provides cover for delivering samples, but not merchandise, so delivery drivers require specific commercial insurance, as do taxi drivers and driving instructors.
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Do I need to extend my car insurance to include business use?
There are various criteria that are typically used to assess whether a driver is using their car for business purposes. You are likely to be considered a business user if you regularly use a car to:
● Travel between different sites or offices
● Make regular visits to business clients
● Drive other employees to carry out work duties
● Make journeys to the bank to manage business finances
● Make deliveries or collections
If any of these apply to you then you should add a business class of use to your car insurance if you haven’t done so already.
Are business classes of use more expensive?
Yes, they can be.
Business drivers spend more time out on the roads than the typical motorist, and often travel at busier times on more heavily congested roads, meaning they are statistically more likely to be involved in an accident. Furthermore, they may well spend a lot of time driving on unfamiliar roads, which is also thought to increase the likelihood of them making an insurance claim.
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In fact, research by the Health and Safety Executive found that more than a quarter of all road traffic incidents involved someone who was driving as part of their work.