Business Vehicle Insurance - A Guide

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Find out the essentials of business vehicle insurance: coverage options, benefits, and tips to help you protect your fleet and reduce risks.

Business Vehicle Insurance - A Guide

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The information provided in this article is for editorial purposes only and not intended as financial advice. SwitchPal is an Introducer Appointed Representative (IAR) of Seopa Ltd. (FRN: 313860).

If your business uses vehicles, the importance of getting them insured cannot be understated. Not only is it your legal obligation, but a failure to keep your vehicles insured could end up costing you a lot of money if something goes wrong, as well. 

Understanding Business Vehicle Insurance

Of course, business vehicle use can be very different to personal use, and this is reflected in insurance for business vehicles being different to those that are used for personal reasons. 

What is Business Car Insurance and Who Needs It?

You’ll need business car insurance if you use your car for any work-related purposes over and above commuting because personal car insurance policies will be unlikely to cover you If you're visiting clients, travelling to meetings or moving between sites, you'll need business car insurance. 

What is the Difference Between Personal and Business Vehicle Insurance?

Because of the higher risk involved, commercial auto insurance tends to have higher rates than personal policies, but they also can have higher limits. Under a commercial policy, you should also be protected should an injured third party sue your company, something your personal policy won’t do.

Types of Business Vehicle Insurance

Business vehicle insurance essentially comes in four different forms:

Comprehensive Cover

Comprehensive car insurance covers you for accidental damage caused by you or others. It can also cover expenses arising from legal action brought against you following a road accident. Damage by fire or theft, vandalism, windscreen repair or replacement cover, and car stereo theft are also covered.

Third-party, Fire and Theft

Third-party fire and theft business vehicle insurance is more restrictive, covering damage to other vehicles and their passengers, as well as loss through fire or theft.

Third-party-only

Third-party-only business vehicle insurance is the same as third-party, fire and theft, only without the ‘fire and theft’ aspect. It is the minimum legal requirement for a vehicle to be used on the roads. 

Temporary Business Vehicle Insurance

Temporary business vehicle insurance is a short-term policy which allows you to use your vehicle for work-related driving. This could be for a one-off business trip or going to meetings at a different office – any travel that’s outside your usual commute. Cover can normally be arranged from one hour to 28 days. Beyond this, you’ll need a standard business vehicle insurance policy. 

What Does Business Vehicle Insurance Cover?

Of course, what you’ll be covered for may vary from policy to policy, but broadly speaking business vehicle insurance should cover the following: 

Protective Cover for Breakdowns

If your vehicle breaks down while you’re on the job, you should be covered for recovery and whatever repairs are required. 

Vehicle Recovery After an Accident

In the event of your vehicle being involved in an accident, you’ll be covered for your vehicle being recovered following the incident. 

Car Loss or Damage

Business vehicle insurance should cover you, should your vehicle be stolen or damaged while you’re carrying out your business.

Rental Coverage if the Insured Vehicle Needs Repair

Of course, if your vehicle does need to be repaired following an incident, every day that it’s off the road could be costing you money. Business vehicle insurance may cover the cost of a rental vehicle so that you can keep trading while your vehicle is being repaired. 

Repair and Replacement of Windscreens

Damage to windscreens can be the bane of a driver’s life. Stray chips and stones can cause a lot of harm. But business vehicle insurance can cover you for this eventuality. 

Insurance Coverage When Driving Abroad

Sometimes, you may be required to drive abroad, and business vehicle insurance can cover you for this, although if this if it’s central to your business you should notify the insurer, as this coverage can be more complex and have limitations on the amount that you can claim. 

Any Driver Policies Vs. Named Drivers

Many businesses will have a fleet of vehicles which anyone may need to use. Any Driver policies cover any of your employees who use the vehicle. Named driver policies are less expensive, but will only cover specific named drivers. 

Does Business Car Insurance Cover Commuting and Social Use?

There are, generally speaking, three ‘classes’ of business car insurance - class 1, 2 and 3. Business class 1 car insurance covers you for social, domestic and pleasure use in addition to driving to and from your place of work. It also covers the policyholder for short business journeys between different sites. Sometimes this class of business car insurance will also cover your spouse, but this will differ depending on your insurer. 

Commuting and social use will usually be covered by a standard social, domestic and pleasure policy, but you should check your certificate and schedule if you are unsure. 

Key Considerations When Choosing Business Vehicle Insurance

There are factors that you need to take into account when choosing business vehicle insurance. To correctly calculate the sort of insurance coverage you need, insurers need to know exactly what you intend to use your vehicle for. And if you're going to be using your car or van for business reasons, then yes, you do need to add business use to your insurance. If you do a lot of business travel and being on the road is a big part of your job, you might need class 3 business use. It covers you for high-mileage business travel to an unlimited number of destinations.

Is Business Car Insurance Tax Deductible?

If you are using car insurance under the category of business purposes for your business, you will be able to claim a tax deduction. This is because car insurance is considered a business expense. Generally, the cost of business car insurance can be claimed as an expense for tax purposes. 

Is Business Car Insurance a Business Expense?

If you are using car insurance under the category of business purposes for your small business, you will be able to claim a tax deduction. This is because car insurance is considered a business expense. Generally, the cost of business car insurance can be claimed as an expense for tax purposes. 

Can You Get Temporary Business Car Insurance?

You can! Temporary business insurance can be purchased as an add-on to a standard vehicle insurance policy. It can run for as little as one hour, or it can last up to 28 days, but if you want to use your vehicle for longer than this, you will need business vehicle insurance.  

Business Vehicle Insurance for Employees

The type of vehicle insurance that you need will depend on what the vehicle is being used for rather than who is using it. Therefore, if a vehicle that you own is used for business purposes, you will need business vehicle insurance to ensure that you are covered should anything go wrong.

Who Pays for Business Car Insurance?

If you personally own the company car, seeking and paying for the insurance is your responsibility. 

As an employer who owns a company car, it is your responsibility to seek the insurance. The cost of this, and any other maintenance, is usually paid for by the employer. But this doesn’t mean it’s free for employees! They will have to pay a company car tax, which is also known as a benefit in kind (BIK).

Why is Business Car Insurance More Expensive?

Business car insurance policies are usually more expensive than standard insurance policies, mostly due to the increased risk involved with these vehicles. Covering more miles often at peak times in areas unfamiliar to the driver, business vehicles are statistically more likely to be involved in a collision or sustain some kind of damage or breakdown due to wear and tear.

How do I Get Business Insurance for my Car?

The first thing to do to get business insurance for your vehicle is to get some quotes. Remember to get more than one, because costs could vary from insurer to insurer.  

To get a business car insurance quote, you’ll need to collect together a few details first. You’ll need to have your registration number to buy a policy, though you can get a quote without it if you know your car’s make, model and age. 

You’ll need to explain how you use your car, including how many miles you drive a year for work purposes. If you have a valid no-claims bonus, you'll need to provide that, as details of any driving convictions, insurance claims, or accidents for yourself or any additional drivers that you want to add to the policy. 

 Vehicle insurance is your legal obligation, but keeping your vehicles insured is about much more than that. The costs of something going wrong can get high, and making sure that you’re covered for the eventualities which may apply to your business needs will give you peace of mind while you’re going about your business. No matter what your vehicle usage is, business vehicle insurance has got you covered!

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