Do I Need Business Car Insurance?
If you or your employees use a car for business then you need a proper business car insurance policy.
A private car insurance policy will not cover you for business use. Some private policies will include cover, but this is only to and from a single, regular place of work, which is sufficient for most people who work in the same location every day. If you use a car for any business purpose other than this, then a private policy will not cover you and you are technically driving around uninsured. Even if it’s just dropping off a business letter on the way home, this is business use and falls outside commuting, so should an incident occur, it could be costly to you personally, and result in points on your licence and higher insurance costs.
Additionally, if an employee of yours is driving without proper business use car insurance and has an accident, there could be serious consequences for your company. Employers have a legal responsibility to ensure the safety and wellbeing of their employees at work or on work business, which extends to car travel. In certain circumstances, a company can also be held liable for the actions of its employees, so it makes sense to ensure you are covered properly in case your employee or a third party ends up being injured.
Business car insurance comes in several different policy types, depending on what your business is, what cover you require, and how the car is used in relation to the business. The definitions below are general, as there are slight variations from insurer to insurer.
Class 1 business car insurance
Aimed at drivers who own their own vehicle which they use for business as well as for their own private purposes. Normally available with social, domestic and pleasure cover, and often you can add your spouse too.
Class 2 business car insurance
This class of business car insurance covers a policyholder’s car for named drivers using the vehicle for business. Generally the policyholder will be the company itself (for company owned vehicles or pool cars), but can be applied to individuals. Nowadays these policies usually include some social domestic and pleasure cover too. In the example above, where a letter is posted on the way home, the reverse can also happen and needs to be covered. For example, an employee runs a personal errand whilst on their way to a meeting.
Class 3 business car insurance
This is sometimes known as “commercial travelling”, where travelling is part of the driver’s occupation. Sales reps fall into this category as they will travel to their own and other people’s premises for work purposes. The cover is not designed for companies that transport passengers or goods for payment.
Hire and Reward insurance
These policies are specifically for companies whose trades are transporting people or goods, such as taxi drivers or couriers, where transport is the main function of the job.
In conclusion, if your vehicle is used in connection with any business at all, bar commuting, you will need business car insurance.
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