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How Much Does It Cost to Add Business Use to Car Insurance?

Written by, Marija Petkova

Updated December, 11, 2023

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Did you know that if you use your car for business purposes, you’re required to add business use to your car insurance? In this guide, we’ll cover the different classes of business car insurance,  explain how much does it cost to add business use to your car insurance and give you some tips on how to reduce the costs of your premiums. 

Let’s dive in.

Do I need business car insurance?

Your standard car insurance covers you for what is known as Social, Domestic and Pleasure use which includes your normal day-to-day driving and commutes to and from your place of work.

But if your job requires you to use your car extensively for business purposes such as visiting different offices or sites, driving clients around or taking on long-distance work-related trips, and you’ll need a specialised business car insurance policy on top of your standard one so you can get the right cover.

If you fail to inform your insurer that you’re using your car for business and you get involved in an accident, they may invalidate your policy and reject your claim.

Moreover, you’ll be driving without cover, which is against the law and could result in a hefty fine.

Car insurance policies for business use are divided into three classes, each offering a different level of cover.  As a general rule of thumb, the more you use your car for business, the higher the class of policy you’ll need.

  • Class 1 Bussiness Insurance will cover you if you need to use your vehicle to travel from your usual place of work to another office or site, run errands or visit clients or customers. These policies will often cover you for commercial travelling, too – if, for instance, you need to take a work-related trip and stay away from home for a couple of days.
  • Class 2 Bussiness Insurance offers the same coverage as Class 1, but it also allows you to add a designated driver to your policy who will also be covered for using your vehicle for business.
  • Class 3 Bussiness Insurance offers the most comprehensive coverage and it is suitable for those who use their vehicle frequently for business, drive hundreds of miles per week and need multiple named drivers on their policy. In addition, this level of cover is necessary if you work as a door-to-door salesperson or an inspector visiting many sites.

It’s worth noting that if you use your vehicle primarily for business, such as taxi driving, uber or delivery, you’re required to take out a specialist insurance policy known as commercial car insurance.   

How much does it cost to add business use to car insurance?

Generally, car insurance policies for business use tend to cost more than standard policies. 

Apart from the fact that business users most certainly will rack up a lot more miles than the average driver, they’ll also be doing a lot of their driving during busy hours and be visiting places that they’re unfamiliar with. 

All of this increases the risk of an accident and therefore raises the likelihood of claiming, which is why business car insurance premiums are higher than on a standard policy. Still, if you are using two cars there is the option to insure both of them in the same name.

However, the exact cost of business car insurance will mainly depend on the type of policy you have, as well as several other factors, including:

  • The nature of your business
  • Your mileage
  • The routes you’ll be driving
  • Whether you carry equipment or goods
  • Your vehicle’s model

So, if you’re driving only a few miles each day on quiet roads, your premiums are likely to be much lower than on someone who needs to spend lot more hours on busy roads.

What’s the most cost-effective way of insuring for business?

Adding business use to your car insurance will most certainly cost you some extra, but there are always ways to keep the costs down.

  • Shop around – One way to ensure that you’ll get the best deal out there is to shop around and compare quotes from different insurance providers.
  • Choose your vehicle’s model carefully – Models with smaller engines and better fuel efficiency are generally less expensive to insure than the latest top-of-the-line vehicles.
  • Maintain your vehicle – Taking proper care of your vehicle will make it safer to drive and reduce the risk of accidents, which will also help you get lower insurance premiums.
  • Build up your No claims bonus Having a good No claims bonus record for your standard insurance can also help lower your business car insurance premiums.
  • Secure your vehicle – Taking extra security measures when leaving your car parked, leaving it in a safe location overnight, as well as installing security devices, such as alarms and steering wheel locks, will help you optimise your vehicle’s security and, at the same time, reduce the costs of your business insurance premiums.
  • Make a one-off payment – Paying for your car insurance in monthly instalments may be more manageable, but it will add interest to your overall cost. Thus, if you can, try and make a one-off payment each year instead of splitting the price, and you’ll end up saving hundreds on interest.
  • Ask your employer for contributions – Some employers will cover the additional cost of business car insurance, and others may pay you an increased mileage allowance, so it might be worth asking your employer if you need to use your own car for business purposes.
  • Choose the right car insurance cover for business use – Depending on how often you use your car for work, and there are several different levels of business cover you can add to your car insurance. Thus, to minimise the costs, it is crucial to get the right one for your specific needs. For instance, if you only use your car occasionally, there is no need for you to pay for a Class 3 Business Insurance that covers long driving distances. Also, if you need your car for business only several times per year, it may be more cost-effective to get temporary business cover for those days instead of purchasing the annual cover.

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Bottom line  

So, how much does it cost to add business use to car insurance? Adding business insurance to your car can be costly, but it is something that needs to be done if you use your vehicle for business purposes on a regular basis. Hopefully, by following our tips on reducing your business car insurance premiums, you’ll find yourself a good deal at an affordable price.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.