Commercial car insurance

Whether you drive a car as sole trader or use a fleet to run your operations, you'll need the right cover.

Vehicles play an important role in most businesses, whether it’s a sole trader’s delivery van or a company’s fleet of commercial vehicles. Commercial car insurance is designed to protect business vehicles against theft and accidents as well as liability and legal costs for third-party property damage. This type of cover is vital for any companies that have vehicles registered under a business name.

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Two main types of commercial car insurance

The two main types of commercial car insurance are commercial motor insurance which covers individual business vehicles against damage and legal liability, and commercial motor fleet insurance which covers multiple business vehicles.

Any business owner can take out commercial motor insurance on their company vehicle, but to qualify for commercial motor fleet insurance a business must own or lease a certain number of vehicles (usually around 15 or so).

What does commercial car insurance cover?

Both commercial motor insurance and commercial motor fleet insurance cover business vehicles against:

  • Theft, loss or damage to the vehicle
  • Legal liability for losses or damage caused by the vehicle.

In both cases, this includes damage sustained while the vehicle is being operated by the policyholder or an authorised driver, damage caused during attempted theft of the vehicle, damage caused by goods falling from the vehicle or damage caused while the vehicle is being loaded or unloaded.

Can I use personal car insurance?

In most cases, no. There are a few key differences between commercial car insurance and personal car insurance policies that are outlined here:

Personal car insurance

An ordinary personal car insurance policy provides coverage when your car is being used for social, domestic and private use. This covers all normal vehicle use such as your daily commute, driving to shops and taking the kids to their weekend sporting games.

Commercial car insurance

As the name would suggest, commercial car insurance covers vehicles used for business purposes. This could include commuting between different work sites, delivering or transporting goods, visiting clients and customers in different locations, and numerous other possible uses.

What if I'm an Uber driver?

If you drive an Uber, there are a specific insurance options that can cover your liability:

Looking for ride-share insurance?

Why should I speak to a broker about rideshare insurance?

  • 100% free consultation with an expert, with no obligation to sign up
  • Your regular car insurance policy won't cover you for ridesharing
  • Many policies won't cover you if you work more than 20 hours. This means you can't work full time!
  • Rideshare insurance gives you your choice of repairer and handle the claims process on your behalf

What does business vehicle insurance not cover?

Just like with any other form of insurance policy, commercial car insurance features a range of exclusions. Make sure you’ve read the fine print closely so that you know when a claim will not be approved. Exclusions differ from one policy to the next, but generally claims will not be paid if:

  • Someone other than the manufacturer has modified the vehicle and this is not shown on the insurance schedule. Modifications include putting in a more powerful engine or lowering suspension.
  • The damage is caused by mechanical failure, rust or wear and tear.
  • The damage was caused because your car was either unsafe or was involved in some sort of race.
  • You or another employee have intentionally inflicted the damage.
  • The damage is caused by a driver who is unlicensed or under the influence of drugs or alcohol.
  • The damage is caused by a driver who is not covered by the insurance policy, or by someone who is using the vehicle without permission.
  • The vehicle was being used unlawfully.
  • The vehicle had been rented or borrowed by an employee for personal use.
  • The driver does not take reasonable care to prevent the vehicle suffering initial or further damage.
  • The vehicle is carrying an excess load.
  • The claim is for existing damage to the vehicle at the time a policy starts.
  • If the vehicle is lawfully destroyed by an appropriate authority.

How much does commercial car insurance cost?

If you’re looking to take out a commercial car insurance policy, you should be aware that there are a number of factors that can influence the cost of your premiums. These include:

  • The type of vehicle(s). As anyone who has ever purchased car insurance would be aware, a top-of-the-line Porsche is going to cost more to insure than a mid-priced family sedan.
  • The number of vehicles. The more vehicles you need to insure, the more you will have to pay.
  • What the vehicles are used for. How often are the vehicles driven and how far do they travel when in use? Are they regularly taken to unfamiliar areas in high traffic periods? Do they travel to work sites where a range of hazards may exist?
  • Your driving record. Do you and your employees have clean driving records, or do you have a long list of infringements and fines?
  • The age of the drivers. Younger drivers have less experience on the roads and are seen to pose more of a risk to insurers. Older, more experienced drivers have fewer accidents.
  • Gender. Women statistically have fewer accidents than men so can expect to pay lower premiums.
  • Your location. Insurers will take into account the number of vehicle thefts in your area, the amount of local traffic and the road conditions in your area.
  • Where the vehicle is kept. A securely garaged car will cost less to cover than a car that is left parked on the street overnight, as the garaged car is regarded as less of a theft risk.

What details might you need to provide in the event of a claim?

In the event of a claim, the business would need to provide the following information to the insurer:

  • The details of the incident including names, addresses, phone numbers, vehicle registration and insurance details of all drivers involved, plus contact details of any witnesses and the name of the police officer and police station if it was a reportable incident (i.e. if someone was injured or the vehicle was stolen or maliciously damaged).
  • Any documentation needed to handle the claim, including proof of ownership and if requested by the insurer, a statutory declaration verifying the details of the claim.
  • Any demands, notices of prosecution, legal proceedings or similar communications from other parties involved in the incident.

Is commercial car insurance tax deductible?

When taking out commercial car insurance, it’s important to be aware of the tax implications of this type of cover. The Australian Taxation Office allows premiums to be tax deductible if you are able to prove that the insurance relates to your ability to earn an assessable income. As a result, businesses are able to claim the cost of their commercial car insurance premiums as a tax deduction.

How to choose a commercial car insurance policy

Follow the tips below to ensure that you end up with the right car insurance policy for your business needs:

Assess your needs

Before you go shopping for cover, take the time to assess exactly how much cover your business needs. How many vehicles do you need to insure? How many employees drive those vehicles and in what circumstances are they driven? How much protection would you need to protect your financial position if a vehicle was stolen or involved in an accident?

Do your research

Head online to research a number of different insurers. See if you can find a provider who specialises in commercial car insurance policies, seek out online reviews and advice from other business owners, plus compare a range of policies at finder.com.au.

Obtain multiple quotes

Get quotes from a number of different insurance providers to get an idea of how much protection will cost. Don’t just select the first quote you get; shop around for a better deal.

Don't just go for the cheapest option

It’s always wise to remember that you get what you pay for and just because a policy is cheap doesn’t mean it’s right for you. Compare what competing policies actually cover to determine the true value of each insurance policy.

Read the PDS closely

It’s vital that you take the time to examine the PDS of each policy you are considering. Compare the features, benefits and options offered, and don’t forget to familiarise yourself with the exclusions.

Talk to an expert

If you need help finding the right policy for your business, speak to an insurance consultant for advice tailored to your specific needs. A consultant will understand the ins and outs of your business and can help you determine how much cover is required.

Commercial car insurance is a vital consideration for a wide range of workers and companies. To ensure your business has adequate cover in place to protect these very important assets, compare commercial car insurance options at finder.com.au and seek expert advice from an insurance broker.

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