Everything You Need To Know About Business Car Insurance

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Regular car insurance may not provide you with the right coverage if you use your car for business purposes. Today, many people are “under-protected” because they have the wrong type of insurance. With your current car insurance, it is possible that you will not receive any compensation if you are involved in a car crash. Unless you have business car insurance. Your standard car insurance only provides coverage for the so-called “social, domestic, and personal use”.

A recent study showed that more than half of drivers do not understand the difference between the regular car insurance and business car insurance. A lot of drivers use their personal cars for business-related purposes. These drivers are surprised when the insurance company tells them that they cannot cover for their car repair after an auto crash. Every year, millions of drivers continually risk invalidating their current car insurance policy by putting their cars into service for what is rightly deemed to be company business. Before signing an insurance contract, a good insurance company will explain the difference between regular car insurance and business car insurance to you.

What is Business Car Insurance?

To put it simply, business car insurance is a type of car insurance that provides comprehensive coverage for drivers who use their car for work-related purposes other than commuting. The premium for business car insurance is usually more expensive than standard car insurance. This type of insurance is for people who use their car as an integral part of their job. It is designed to give you more flexibility and usually cover things that are not seen in the normal car insurance policy.

Business Car Insurance

Standard car insurance usually only covers commuting for social, domestic, and for the purpose of leisure. If you have a car that you use to visit friends, take your children to and fro school, head out to the shops for groceries, and ferry yourself to and fro your recognized place of work, then your private car insurance is sufficient for you. Otherwise, you need business car insurance.

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Do I Need Business Car Insurance?

When we talk about using a car for business-related purposes, most drivers think we are referring to people such as taxi drivers, Uber drivers, couriers, pizza delivery drivers, funeral concierge, and other drivers in such line of business.

You certainly need business car insurance if you use your car while working. Take, for instance, if you are a doctor who travels to various locations daily to administer treatment, you need business insurance. The same applies to a freelance teacher who travels to multiple locations for work. A caterer would have no coverage under standard insurance if she is involved in an auto crash while going to meet her clients.

You also need business car insurance if you:

  • Travel between various work locations
  • Run business errands during the day
  • Visit clients/customers as part of your business
  • Drive around other employees or business contacts
  • Make deliveries or collections
  • Allow other employees to drive your car

Types of Business Car Insurance You Need To Know

Business car insurance is categorized into different classes. This means, if you use your car to travel between various work locations, you will need slightly different insurance to compare to an Uber driver. This way, you will still get the maximum coverage without paying too much premium. We’ve listed the 3 classes of business car insurance below:

1. Class 1 Business Car Insurance

This is the cheapest class of business car insurance. This type of insurance only covers drivers who commute between multiple work locations. For instance, a care worker who travels to various locations to visit patients will need this insurance. If your work also involves traveling to visit your customers or business contacts, then this class of business car insurance is for you. Class 1 insurance won’t cover you if you use your car for deliveries or for door-to-door sales.

2. Class 2 Business Car Insurance

Class 2 business car insurance provides the same coverage as Class 1 with a slight difference. In Class 2, you are allowed to add a named driver as far as the driver works for the same organization/company as you. In this case, the insurance company will pay you compensation if the named driver gets involved in a car accident while driving the car. Class 2 is usually more expensive than Class 1. Just like Class 1, it does not cover the use of a car for deliveries or for door-to-door sales.

3. Class 3 Business Car Insurance

Class 3 is typically for salesmen, delivery drivers, and people that travel a lot of miles as part of their job. As expected, this is the most expensive of the 3 classes mentioned so far but not the most expensive overall. Note that this insurance won’t cover you if you are a taxi driver or use your car to make deliveries. It covers delivering samples but not commercial merchandise.

How To Find The Right Business Car Insurance Policy

Now that you’ve known the type of business car insurance you want and why? it is time to start shopping for a business car insurance quote. You need to have it in mind that different companies provide different types of coverage. This is why you should compare different quotes, read reviews, and ask questions before you sign any insurance contract.

Just like your standard car insurance, a number of factors such as age, type of business, location, driving experience, and many more will influence the rate you pay. Thus, before you get a business car insurance, it makes sense to consider these factors as well as other factors such as:

  • Your type of business
  • Insurance company reputation/history
  • Insurance company’s financial strength
  • Type of coverage offered
  • Price
  • Ease of doing business
  • Customer service
  • Proximity
  • Available discounts

No doubt, these factors mentioned above will help you choose the right business car insurance company to provide you the type of coverage that will give you peace of mind.