If a car is used for business by yourself or other employees, then a business policy is mandatory.

Commuting is normally covered under a private car policy but this is simply driving to and from a single, fixed place of work. No other business use would be covered. But what counts as business use? Leaving your place of work and driving for any purpose related to your business. For example, posting a letter on behalf of the business, or even buying some milk for the office kitchen. In the event of a serious incident, everything will be scrutinised closely, including the insurance arrangements and exactly where and why the vehicle was being driven. This can have serious consequences for the driver if proper cover wasn’t in place.

If you are an employer, you are also partly responsible for an employee’s actions behind the wheel and their health whilst on your business. Just because they are off the premises and in a car does not mean your responsibility under law for their health and safety does not still apply. If an employee is seriously hurt in an accident, your company may be partly liable, and this also extends to anyone else your employee may cause injury to, so it pays to be properly covered.

Business use is separated into several categories depending on the needs of the business and how the vehicle is going to be used. There follows a general description of the different classes, although there will be slight differences from insurer to insurer.

Business insurance for Cars – Class 1

Aimed at drivers who own their own vehicle which they use for business as well as for their own private purposes. Normally available with social, domestic and pleasure cover, and often you can add your spouse too.

Business insurance for Cars – Class 2

This cover is similar to class 1 in that it covers a policyholder’s vehicle for business use, but doesn’t necessarily cover any personal use. In the case of class 2 cover, the policyholder is usually the company itself, wanting to cover pool cars or other vehicles the company owns. Social, domestic and pleasure use can usually be added to these policies if required, but it is worth noting that if this is not included, then the car can only be used strictly for business use, so borrowing it to pop out to post a personal letter or some such private errand will not be covered.

Class 3 business car insurance

This is sometimes known as „commercial travelling“, where travelling is part of the driver’s occupation. Sales reps fall into this category as they will travel to their own and other people’s premises for work purposes. The cover is not designed for companies that transport passengers or goods for payment.

Insurance for Hire and Reward

Hire and reward policies are necessary when transportation is the main purpose of a business. So couriers and hauliers need this form of insurance. Taxi insurance is also a form of hire and reward cover.

So for any business use apart from commuting, then a proper business car insurance policy is required by law.

M Withers is Commercial & Marketing Manager at Coversure who offer quotes for company car insurance including courier insurance.