Business Car Insurance
Vehicle Insurance for Business Use
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What is business use car insurance?
If you drive as part of your job, you’ll likely need business car insurance. This covers activities like visiting clients or travelling between job sites. But if you’re just commuting to and from one workplace, standard car insurance is usually enough. There are three usage options to choose from when you take out car insurance. These include:
Social, Domestic, and Pleasure (SDP)
This covers you for all of your personal journeys in the car. Like visiting friends and family, or going to the shops.
SDP and Commuting (SDP&C)
This covers your daily commute to and from your regular workplace, as well as social, domestic, and pleasure use.
SDP&C and Business Use
This is a comprehensive option that offers the same protection as the previous two, as well as using your car for work tasks.
Why do I need to insure my car for business use?
If you don’t have business car insurance, your insurer might not pay out for accidents that happen while you’re driving for work. Simply put, if you don’t have business car insurance, you aren’t insured when driving for work purposes.
What’s more, if you misrepresent how you use your car, you could void your policy (whether you meant to or not). You also risk breaking the law by driving without the right insurance.
Who needs business use on car insurance?
Some examples of when you might need business use cover include if you:
Drive between different workplaces or job sites
Visit clients as part of your job
Attend training courses or work-related conferences
Transport tools, samples, or business documents
Make sales or promotional visits
Run work-related errands like going to the post office or bank
Deliver goods or provide mobile services
Use your car to travel between multiple business appointments
Types of auto insurance for business use
Class 1
Covers occasional work-related driving. For example, driving between multiple places of work, or occasional travel for client meetings.
Class 2
This option provides identical coverage to class 1, but allows you to add a named driver. This is ideal for employees who share a company car. But most insurers require all drivers to work for the same company.
Class 3
This option is for people who drive long distances regularly for work. Also called “commercial travelling”, this is ideal for sales reps and other high-mileage business drivers.
What does business use insurance cover?
What can be covered
If you’re thinking about business use car insurance, it’s helpful to know which type of coverage suits your situation.
- Fully Comprehensive Car Insurance: Offers the highest level of protection. It covers third party claims, fire, theft, and any damage to your own car. It even covers accidents where you’re at fault.
- Third-Party Car Insurance: This is the minimum legal requirement. It only covers damage to other people’s vehicles or property.
- Third-Party, Fire and Theft Insurance: This covers you not only for third-party claims but also if your car is stolen or damaged by fire.
What is not covered
Business use car insurance usually excludes:
- Courier work or delivering goods for hire and reward.
- Taxi driving or private hire services.
- Work as a driving instructor.
- Commercial haulage.
- Driving outside the UK without proper cover.
- Borrowing someone else’s car for business purposes.
Additional coverage available
- European cover insurance
- Personal accident cover
- No claims bonus protection
- Breakdown cover
- Courtesy car cover
- Tools and equipment cover
The cost of insuring a car for business use
How much is business car insurance?
How much you’ll pay for your business car insurance also depends on:
- The car you drive – insurers check your car’s make and model and its car insurance group.
- Your estimated mileage for work and for social, domestic or leisure activities.
- Your no-claims discount and your driving record.
- Your age – Young drivers, usually pay more due to higher risk, while older drivers often get cheaper rates.
- The class of coverage you need – Class 3 business use is typically the most expensive. These drivers spend more time on the road, making them a higher risk for accidents and claims.
Who pays for business use insurance?
Typically, business car insurance is covered by the company you work for. This is because they own the vehicle you’ll be using.
However, It’s still a good idea to go over the terms and coverage with your employer.
These policies can come with restrictions like mileage allowances.
If you work for yourself as a sole trader, you’ll need to set up and pay for your own business car insurance.
How can I get cheaper business car insurance?
Business car insurance can be more expensive than standard cover. But there are several ways to help lower the cost.
Compare quotes from multiple insurers
Increase your voluntary excess
Keep a clean driving record
Limit your annual mileage
Pay annually if possible
Only choose the cover you need
Vehicle Insurance for Businesses FAQs
Does business car insurance cover social use?
Can I change my car policy to include business use?
Does covering business use increase insurance costs?
Does a comprehensive policy cover business use?
Does my insurance cover business use?
Can I get a car policy for business and personal use?
Page last reviewed on 16th June 2025
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