Updated 26 March 2021
If you use a vehicle to operate your business, you want to make sure your car, van, truck or lorry – or your fleet of vehicles – is covered by the most appropriate commercial insurance policy. Making the wrong choice could disrupt your business’s operations, leaving you out of pocket and at risk of liability.
If you use vehicles to run your business, then you’ll need a commercial car insurance policy. Commercial car or vehicle insurance is used to cover taxis, minibuses, HGVs, driving instructors, delivery vans and business fleets with two or more vehicles.
Commercial vehicle insurance is a legal requirement in the UK, which protects you if you use your car or van for work-related purposes. It covers a much wider range of uses than a standard vehicle insurance policy.
In the event of an accident or incident, as well as protecting third parties, commercial vehicle insurance policies are designed to protect you and your business assets to ensure your business can continue operating.
Commercial car insurance covers people who use their car as an integral part of their job – such as delivery drivers, taxi drivers or driving instructors.
If you use your car while working, then you’ll need business car insurance.
Standard car insurance policies only cover your daily commute. If you use your car for anything other than driving to a single place of work, then you’ll need business car insurance. If you’re involved in an accident while using your car for work and you don’t have business car insurance, you’ll be unable to make a claim – and you may be committing an offence.
Business use car insurance comes in several different classes, depending on what level of cover you need:
Commercial vehicle insurance includes:
As with regular car insurance, you can choose from three cover levels: third party only, third party, fire and theft or comprehensive.
There are generally other options available such as named driver policies and any driver policies suitable for firms with multiple vehicles and lots of drivers, such as taxi firms, hauliers or delivery companies.
The more comprehensive the cover you choose, the more it’s likely to cost. And, if you use your car for work, it could be expensive. This is because insurers assume you’re on the road more, possibly in heavy traffic, driving in unfamiliar places, which could mean you’re more likely to have an accident. Because commercial policies can cover a wide variety of risks, it’s difficult to give an average cost.
In some cases, tailored business car insurance can actually be cheaper than standard car insurance. According to gocompare.com, on average, fully comprehensive business car insurance costs around £92 less than standard fully comprehensive insurance – £431.35 a year compared with £544.02.
When it comes to calculating the cost, factors such as the vehicle you drive, your driving history and how many miles you clock up all contribute to the cost of your insurance more than whether you drive your car for work or not.
As with regular car insurance, there are things you can do to help you get the best deal for commercial car insurance, such as:
If you run a business with more than one vehicle, fulfilling your legal requirement to keep them all insured is where things get more complicated, especially if you employ multiple drivers who are likely to drive different vehicles at different times. Things to consider include:
Finding the right policy for a business vehicle is not always straightforward, and it’s essential to make sure your policy is the exact fit for your business activities. With so many factors to consider it’s well worth getting advice from a financial adviser, especially if your vehicle operations are key to your business's day-to-day running. They’ll be able to take a deep dive into your circumstances, understand your requirements and talk you through the details so you can make an informed decision.
With a commercial vehicle insurance policy, you’re protected if:
How much cover you have depends on which level of commercial car insurance you choose.
If you operate more than one vehicle as part of your business, fleet insurance may be a good option. There are also ‘mini fleet’ options available, which are designed to cover businesses with between one and four vehicles. You’ll need to check the small print as policies vary. Some will include a wide range of cover as standard, others will offer additional protection for extra payment, and others will only offer basic cover. What you need will depend on your business, but some of the options to look out for include:
Commercial insurance policies don’t cover you if your car or van is used for purposes that aren’t under the description of use, or your vehicle is being driven by a driver your policy doesn’t cover. Your policy documents will provide you with the full list of exclusions, but the most common ones are:
Many commercial vehicles are also used in a private capacity by company employees. If your vehicles are used this way, check your insurance policy covers them as they’re often excluded on fleet policies.
When you run a business, you’re exposed to many more risks than working for someone else. Along with more responsibilities, you also have more assets to protect. There are many forms of insurance that a business may have. Some are compulsory, while others range from extremely important to just nice to have. Your financial adviser or accountant can advise you on which types to prioritise. The main types of business insurance are:
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