Business car insurance classes explained

What are the different types of business insurance, and which class do I need?

The world of insurance can feel like navigating a maze with no map.

But don’t worry – we’re here to steer you in the right direction when it comes to business car insurance, so you know exactly what cover you need to protect you, your car, and your business.

Do I need business car insurance?

If you only use your car for commuting to and from your work, you’re covered by your regular social, domestic, pleasure and commuting insurance.

But if you’re clocking up the miles for work purposes – like travelling to meetings or visiting clients – you’ll need to get specific business car insurance.

With the average company car driver covering more than double the mileage of domestic drivers, having the right level of coverage is crucial. After all, you want to be protected should you end up in a collision while you’re out representing your business.

You’ll need business car insurance if you:

• Run business errands during the working day
• Travel to meetings or between different sites
• Drive colleagues or business contacts around
• Allow your employees to drive your car

Taking out business insurance is straightforward.

You can either let your existing insurer know about the change, or you can search for a new policy if you want to compare quotes. Just indicate what you’re using the car for when filling out the paperwork, and your insurance provider will take care of the rest.

And if you’re looking for an easy way to spread the cost of your next company car, business car leasing allows you to get behind the wheel for a fixed monthly payment, so you can balance the books and enjoy the ride.

What are the three classes of company car insurance?

The three classes of business car insurance

Not all business driving is created equal – that’s why there are different classes of business insurance.

Which one you’ll need depends on who’s using the car and what you’re using it for.

Business Class 1

Business Class 1 insurance covers your car for short work-related journeys – think of it as the first step up from your standard insurance policy.

You’ll need this level of cover if you use your car during the workday for business purposes, like visits to other sites or customers, but no one else is driving it. Class 1 insurance often covers your spouse too, provided any business driving they do is for your business, not their job.

The good news?

Class 1 business insurance also covers you for all your regular day-to-day driving, like visiting friends or commuting to and from work.

Business Class 2

This provides the same level of coverage as Class 1 insurance, but adds the benefit of being able to put another named driver on the policy.

If you own a small business with only one or two drivers, this is likely the coverage that’ll suit you best. You’ll be able to add an employee to the policy so they can also use the car for business journeys, saving you the hassle of taking out multiple insurance policies.

Business Class 3

As well as providing all the cover of Class 2 insurance, Class 3 business car insurance goes that extra mile and insures you to make unlimited long business journeys without a set destination.

If your work involves something like door-to-door sales, this is the level of coverage you’ll need.

Usually, you’ll be allowed to carry samples under the policy, but if you’re making deliveries, you’ll need to step up to commercial car insurance.

Real-world examples

Whether you’re employed by someone else or you’re self-employed, if you’re using your car for work, you’ll need business car insurance.

Here’s some examples of who needs what:

• A nanny who uses their car to run errands and transport children to after-school activities will need Class 1 business insurance
• An estate agent employed by a local company, but using their own car to drive between viewings, will also need Class 1 insurance
• If an architect’s assistant uses their boss’s car to drive to client sites, the architect would need Class 2 business insurance to cover both of them
• A travelling salesperson using their car to drive around the UK with product samples would need Class 3 insurance

Is business car insurance more expensive?

In a word, yes – but for good reason.

Insurance companies see cars being used for work as more of a financial risk: you’re driving longer distances, and a lot of time those miles will be clocked up on unfamiliar roads.

On a law of averages, a company car driver is more likely to end up making a claim.

This typically makes premiums for business vehicle insurance higher than standard car insurance, but the process is the same.

You’ll still be asked questions about your age, where you live, and the car you drive, as well as your type of work (which can affect the price), how often you drive, and the distances you’ll be travelling.

How to save money on your business car insurance

There are several ways to keep your premiums down without putting the brakes on your coverage:

• Choose wisely: Pick a car in a lower insurance group – the insurance company won’t have to pay out as much in a claim
• Be mileage-smart: Be accurate with your expected mileage for both domestic and business use, as overestimating could mean you pay more than necessary
• Secure parking: If you often stay away from home when travelling for work, parking in a secure garage or car park might lower your premiums
• Consider temporary insurance: If you rarely use your car for work, some insurance companies offer temporary insurance for a specific length of time

Ready to hit the road?

Getting the right business car insurance means you can focus on the job at hand rather than worrying about whether you’re properly covered.

And when paired with a business car lease, you’ll have both your vehicle and your insurance needs sorted – putting you firmly in the driving seat of your business transport.