Company Car Insurance

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What is Company Car Insurance?

When considering company car insurance, if you run a small business and the company owns and runs your car and perhaps those of your partners or fellow directors, you will want to consider how best to insure your company-owned cars. If the business operates more than four vehicles, it may be worth considering a mini-fleet insurance policy. For drivers seeking business lease car insurance or contract hire car insurance, your options include either insuring the vehicle on a standard private car insurance policy with the correct business class use included, or alternatively insuring several cars on a single business-use insurance policy.

What is considered business use for cars?

Quite simply, a car is considered used for business if you use it for work. This does not include a car you drive to and from your normal place of employment but does include vehicles you use for:

  • Making deliveries or pickups for work
  • Carrying goods or samples related to your job
  • Driving colleagues or clients to another location
  • Driving to meet clients or customers
  • Driving to different locations specifically for work purposes

Why use company car insurance?

In the event of an accident in your car, holding a sufficient level of insurance is crucial to keep you protected. If you need to make a claim in a company car, whether it is a company-owned car or a business lease, and don’t have specific company car insurance, then your claim may be rejected, and you may be committing an offence. Many companies will insure their cars for their employees; however, it is essential to check this with your employer and find appropriate cover if not.

It is important to understand the differences between company car insurance and commercial car insurance. Commercial insurance is for those whose vehicle is crucial to their occupation, such as a taxi driver or driving instructor.

The different types of company car use

Class 1 Car Insurance

Used for people who drive between locations, such as visiting customers or clients. Class 1 is often the cheapest form of company car insurance for employees. Class 1 insurance is usually the most affordable and can sometime be added to a standard car insurance policy at little or no extra cost.

Class 2 Car Insurance

Class 2 insurance affords you the same cover as class 1, but also allows you to add a co-worker as a named additional driver; this person will also be able to use the car for the same business purposes.

Class 3 Car Insurance

Class 3 is for drivers who will be travelling exceptionally long distances, such as travelling salesmen or 'commercial travellers'. Class 3 is usually the most expensive but gives you the most comprehensive business-related cover.

What does company car insurance cover?

  • Comprehensive: This covers the driver, the car, its passengers, property, third parties, vandalism and theft
  • Third-party, fire and theft: This covers third parties in the event of an accident, as well as fire or theft. It does not cover your vehicle in the event of an accident or vandalism.
  • Third party only: The most basic, cheapest and legal minimum level of cover in the UK. This covers third parties injury and damage to third party property.

Additional types of cover available

Additionally, you may opt to extend your insurance cover, usually for a slightly higher premium. Common insurance policy 'add-ons' include:

  • Breakdown cover: In the event your company car breaks down and needs recovering or repairing at the roadside
  • Lost car key cover: To cover the cost of replacing your car keys if they are lost or stolen
  • Courtesy car: A replacement vehicle so you’re not left stranded in the event of repairs to your company car, following an accident
  • Windscreen cover: Usually included in comprehensive car insurance, cover can often be purchased for TPF&T policies, to cover the cost of repairing or replacing your car windscreen
  • No claims bonus protection: In the event of an at-fault claim, your no claims discount would not be lost or reduced

How can we help?

QuoteRack will pass your business lease car insurance requirements to specialist insurance brokers who will be able to offer you competitive quotes and relevant advice on how to achieve the right cover for your business.

Frequently asked questions

Is company car insurance expensive?

As with any insurance policy, this depends upon your individual circumstances. Your personal and business details will have a part to play in your insurance quote, such as your age, location, where you leave your car during day and night and your driving experience, as well as the actual base price of the vehicle.

Common details that can increase your company car insurance premium include:

  • When and where the car is driven
  • How many miles - both personal and business use - the car will cover annually
  • The class of business use of the car

It is also possible to reduce the cost of your company car insurance by:

  • Choosing a cheaper car
  • Choosing a greener, electric car or hybrid car
  • Restricting your annual mileage
  • Restricting the use and number of drivers of the vehicle
  • Increase your insurance policy excess
  • Install a telematics 'black box' that monitors how the car is being driven
  • Install a dash cam
  • Garage the car overnight
  • Fit a tracking device to the car
  • Pay your insurance premium annually

Do claims on a company car insurance policy affect my personal no-claims discount?

In the event that you need to make a claim on your company car insurance policy, it should not affect your personal no-claims discount on a car that you yourself owns. A claim, however, should be reoported to your own insurers and they could increase your premium

Are there any tax considerations with driving a company-owned car?

For businesses that need to provide insurance for leased cars for their employees' private and business-use of the vehicles, there are also tax implications for both the business and for the employee, as a recognised 'benefit in kind' tax liability.

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"I am self-employed and I needed the cheapest quote for my contract hire car insurance - I was pleasantly surprised by the quotes I received"

"If you lease a car through your own business and use the car for business purposes, a company car insurance policy with the correct class of use will ensure you are properly covered."

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