Looking to get your car insured for business use? Learn the conditions before applying.
If you use your car for business purposes, whether it’s a work van, a delivery truck, a part-time taxi or anything else, it may be a good idea to consider getting a car insurance policy for business use. This is because standard consumer car insurance policies will often not cover a vehicle while it’s being used for business purposes which can lead to claims being denied.
Business use car insurance is a way of extending standard policies so you’re also covered when driving the car for business purposes. Business use car insurance is only for when you’re driving the same car for business use and for personal use. Company cars, or cars which are only ever used for business purposes usually require commercial car insurance instead.
Conditions for application
Conditions vary between providers but you will generally need to inform your provider if you plan on using your vehicle for business use during application.
Compare comprehensive policies from Australian brands
What makes business use car insurance different?
When you take out a car insurance policy, you will often have the option of selecting business use during the application. For example, an application might ask whether you:
- Drive the car for personal use only
- Occasionally drive the car for business use
- Regularly drive the car for both personal and business use
Most comprehensive policies will automatically exclude cover if the vehicle is used for:
- Carrying passengers or other people’s goods for payment
- Driving tuition for payment
- Hiring the car to other people for a fee
If you do not specify that you use the vehicle for both personal and business driving, you might not be covered at all while driving the car for business purposes, and any resulting claims might be declined. By selecting business use during application, your policy may also include additional types of cover such as:
- Including tools of trade under personal effects cover
- Insuring your business partners, employers, principals or associates to drive the car
When your vehicle is essential to your income, for reasons other than just driving to work, you probably need a business use car insurance policy. For example, if you carry passengers for pay then that would be a business purpose, or if you sometimes use your car to specifically carry construction materials to a building site then that would also be a business use.
How much does business use car insurance cost?
Cars that are used for business purposes will also tend to be on the road a lot more, which makes a significant difference to the likelihood of being involved in an accident. As such, it generally costs more to insure a vehicle for both personal and business use than it does to insure it for personal use alone.
It can face additional risks to those just being used for everyday use. Most people, for instance, will never drive their car onto a construction site, or carry a lot of potentially hazardous cleaning materials in their vehicle, while you might do it everyday.
- The type of vehicle it is
- What its primary use is
- How many different drivers use it
- What types of damage it is likely to be subject to
What will business use car insurance policies not cover?
You will typically find the same general exclusions as most other car insurance policies, with a few others. You may not be able to claim for:
- Using the vehicle in connection with motor industry tests or demonstrations
- Renting or hiring the vehicle out to other people, or if it’s someone else’s possession for sale purposes
- Damage to the vehicle as the result of bitumen or concrete setting on it
- Unsafe use of cranes in connection with the vehicle
- Any asbestos liability
- Financial loss resulting from the vehicle being unusable
With business use car insurance, insurers are more likely to understand that you do not necessarily have complete knowledge or control of your employee’s actions. Depending on the policy, you may still be partially covered when you weren’t the driver, but your employee:
- Refuses to take legal breath, blood or other drug test following an accident, if you are able to demonstrate that you were not aware of the driver’s condition or refusal.
- Is driving unlicensed without your consent, if there is reason to believe that you didn’t know about it, such as if they were using a fake license or it had recently expired or had been cancelled as a result of unpaid parking fines.
How to find the right business use car insurance policy
The right policy will meet all three of your main needs:
- It’s affordable
- It has adequate cover for your personal driving
- It effectively meets the specific needs of your business driving
Most comprehensive business use policies will be adequate for personal driving use, and you can instead pay special attention to matching the cover with your business. For example, a travelling salesperson might expect long distance driving and frequent starting and stopping, while a builder might be more interested in protection from the risks associated with driving onto a construction site. Consider:
- The specific types of damage or hazards you are likely to encounter
- Whether employees will also be driving the car
- Whether you need cover for an equipment trailer or caravan
- Whether you need trade tools cover, or cover for the equipment carried in a trailer
- What level of liability cover you need
- What kinds of goods or equipment you tend to carry in your vehicle on a daily basis, and the risks these may pose
- What kind of vehicle you’re getting insured and how many need to be covered
Cars, trucks, vans and almost all vehicles that may be associated with business use can be insured under this policy type. The type(s) of vehicle covered may have further impacts on your costs and cover needs.
It’s possible that a standard car insurance policy will be adequate, but you should check the exclusions to find out whether you’re still covered when driving the car for business purposes. If you have more complicated business needs, or want cover for multiple vehicles, it might be worth using a car insurance broker to help find the right level of protection for you and your livelihood.