If you are claiming mileage while driving for work, you’re legally required to have business car insurance.
Driving for work without business car insurance means you won’t be covered and are essentially uninsured.
If you’ve ever asked: ‘Do I need business car insurance to claim mileage?’ read on.
Do I Need Business Car Insurance to Claim Mileage?
Yes, you’ll need business car insurance to claim mileage.
If you’re claiming mileage, it means that you’re driving for work, and therefore you’re legally required to have business car insurance.
Business car insurance covers privately-owned vehicles for work-related travel such as driving to see clients, visiting work locations, or running errands. There are several different classes of business car insurance, and which one you need depends on the type of driving you do.
If you use your vehicle for business use without intentionally or unintentionally informing your insurance company, you may find that you’re driving without cover and breaking the law, and your insurer may refuse to pay out if you have an accident.
Business car insurance provides cover for your vehicle and peace of mind for you. Not only that, but you can also extend your cover to include co-workers or employees.
What is Covered by Business Car Insurance?
Business car insurance covers you for work-related driving, commuting, and normal day-to-day driving. Insurance companies break business car insurance down into different classes depending on use.
Some examples of the types of driving covered by business car insurance include[AS1] :
| Commuting to and from your normal place of work | Conducting work-related errands |
| Driving between work locations | Commercial travel |
| Driving to client visits | Social, domestic, and pleasure use |
You can choose the cover you want for business usage when applying for vehicle insurance.
You’ll typically be asked: ‘What will you use the car for?’ followed by the 6 options set out below:
1. Social, Domestic, and Pleasure
This enables you to use your vehicle as a normal daily driver for a variety of tasks such as visiting friends, going to the supermarket, the school run, or taking a day trip. Also known as SD&P, this level of cover won’t insure you for driving your car to or from work and for other work-related travel.
2. Social and Commuting
A social and commuting policy covers you for driving to and from work in addition to what’s covered by SD&P insurance. You’ll also need social and communing added to your insurance if you drive to the railway station before taking the commuter train to work. Similarly, you may also need this type of cover if you take other passengers to work, even if you’re not commuting yourself.
Despite the word ‘commuting’ in the title, this type of insurance doesn’t cover you for driving your vehicle for any business-related use other than commuting to your office or place of work.
3. Business (Class 1)
You’ll require Business Class 1 cover if you use your vehicle for any work-related travel. For instance, you may be required to travel between offices and work locations, or to client meetings and customer visits. Similarly, if you run errands such as driving to the bank or collecting a colleague from the station, you’ll need Business Class 1 cover.
This type of insurance can also cover commercial travel which may involve lengthy stays away from home for business purposes. We explain about commercial cover below.
4. Business (Class 2)
Business Class 2 insurance provides the same cover as Business Class 1 but also allows a named driver to use the vehicle for similar purposes. This means a named driver can use the vehicle to drive to work, meetings, and other business-related travel under Class 2 cover.
5. Business (Class 3)
If you’re a frequent business traveller, you may need Business Class 3 cover. This insurance is designed for people who regularly drive between locations for work purposes such as salespeople seeing clients, health workers visiting patients, and store managers that hop between different stores.
6. Commercial
If your vehicle’s primary use is for business, you may need commercial cover. This type of insurance is suitable for taxi drivers, driving instructors, mobile food and drink vans, and others who use their vehicle for commercial purposes and to conduct their daily business.
What are the Three Types of Business Car Insurance?
There are three types of cover for business car insurance policies. These are the same as regular car insurance:
Third Party Only Cover (TPO)
The most basic level of business car insurance is third party cover. It is the minimum requirement of cover required by UK law. If you are at fault in a collision, third party insurance protects against:
- Costs arising from injuries to other passengers and people
- Damage to property (car, fence, wall etc)
However, third party cover does not insure against damage to your own car, or theft of your car. As the name implies, it pays out to compensate a third part only, not you.
Third Party, Fire and Theft Cover (TPFT)
This includes everything covered by TPO plus extra protection for your own vehicle if it’s stolen or becomes damaged in a fire.
Comprehensive Cover
This is the most robust, comprehensive type of insurance. On top of everything included in TPO and TPFT, it covers you for personal injury and damage to your own vehicle in the unfortunate event of an accident. Some comprehensive cover policies also protect you against natural disasters such as flood damage.
How Much Does Business Car Insurance Cost?
Business car insurance premiums are generally more expensive than standard vehicle insurance. This is because of:
- The greater risk of an accident
- Higher liability limits
- More miles covered than average and at busier times
However, like standard vehicle insurance, business car cover can be tailored to your specific needs and driving habits. That means if you drive your car a few miles to work, you’ll probably pay less than someone with a 50-mile commute through a busy city centre.
If you’re wondering how to apply for business car insurance, several factors will be used to determine how much you pay for business cover including your job title and the work you do, your annual business mileage, the routes you’ll be driving, plus the goods and equipment you’ll be transporting.
Similarly, there are varying costs involved with adding ‘commuting’ to your car insurance. So, if you only drive a short distance to park in a company car park, your premiums will be cheaper than if you drive long distances to work and park on a public street.
Can I Pay Lower Business Car Insurance Premiums?
Yes, there are ways to keep the cost of business insurance down, although you’ll still need adequate cover even if your vehicle is used sporadically for work.
For example, if you only use your car for work purposes once every month, you may not require an annual policy that covers you for daily business use. Instead, it’s likely to be more cost-effective to take out temporary cover on the occasional days when you’re using your vehicle for business purposes.
What’s the Difference Between Business Car Insurance and Company Car Insurance?
Company cars are typically owned and insured by an employer and given to employees for work. All company cars will have ‘business use’ as part of their cover to allow business-related travel.
You can also add ‘business use’ to your personal car insurance policy if the vehicle is being used for work. This applies to both privately-owned vehicles and vehicles that are leased for business purposes.
Are You Still Wondering if You Need Business Car Insurance to Claim Mileage?
Business car insurance can be confusing, so we’ve compiled a list of FAQs to help you understand the options available to you. If you’re looking for business car insurance, contact us today.