Business car insurance, explained simply

What is business car insurance?

Business car insurance is a form of regular car insurance that allows you to use your vehicle for some business use. In other words, it's insurance for your personal car, but means you're covered if you use it for work too. This means that in addition to day-to-day commuting, you're also protected against damage or theft while occasionally performing business activities that aren't an essential part of how you earn income. This can include things like visiting clients, transporting goods, or running a mobile business.

Like any other personal car policy, you'll have a choice of the level of cover you'll get while you're on the road:

• Comprehensive car insurance
• Third party property car insurance
• Third party, fire and theft car insurance

Business car insurance is not the same as commercial car insurance. It's not meant to insure vehicles only used for business, such as delivery vans, trailers, or heavy-duty vehicles like bulldozers. The type of incidents and damage it covers will also be less extensive than commercial car insurance.

What do insurers consider as 'business use'?

Each insurer will have its own rules for it classifies as business use, but generally, these include activities such as:

It's important to understand that what is considered 'business use' may not be the same things that different insurers count as 'occasional business use'. For example, providers like Allianz won't cover you for rideshare or carshare use, and you run the risk of voiding your cover if your car is used for these purposes.

Always refer to the insurer's product disclosure statement (PDS) so you're aware of what is and isn't covered by a policy.

What types of vehicles can be covered under business car insurance?

Business car insurance is intended to insure personal vehicles, which can include the following:

The range of vehicles that can be covered isn't as extensive as a commercial car insurance policy, and most policies don't insure things like trailers, trucks, and earth-moving vehicles.

What's the difference between business car insurance and commercial car insurance?

Business car insurance is a personal policy designed to safeguard your private vehicle when used occasionally for business purposes. Unlike commercial car insurance, business car insurance tends to be more limited, typically catering to passenger vehicles such as sedans, utes, and wagons.

In contrast, commercial car insurance is tailored for vehicles solely dedicated to business activities. It usually provides a broader level of protection and covers a wider variety of vehicles.

As a type of personal insurance, business car insurance covers just one vehicle under a single policy. Commercial car insurance, on the other hand, is designed to insure multiple vehicles and even entire fleets.

Here's a simple breakdown of the two:

How do I get business car insurance?

If you're looking for business car insurance, there are two main ways to get it – directly through an insurer or via a broker if you have specific needs.

Directly through an insurer

Going through an insurer is the most cost-effective to get cover upfront, but it does come with a bit of leg work. You'll have to find an insurer that includes the use of the car for business activity in its car insurance policies. It's important to be upfront about how you plan to use your car. This way, you'll get the coverage that's right for your situation, and the insurer can see if business use insurance is a good fit for you. Your insurer might have a few extra business related questions, like:

• Are you planning to use the car to do ridesharing work like with Uber or Didi?
• Is the car being used to transport goods or make paid deliveries?

If you already have car insurance and decide you want to start using your car for business, it's a good idea to reach out to your insurer to see what your options are. If they offer business use for personal vehicles, you can typically update your policy and adjust your premium.

Via a broker

Talking to an insurance broker can be helpful if your insurance needs are complicated or time-consuming to figure out.

You'll have the advantage of the experience and expertise of regulated financial advisers who specialise in insurance. This includes understanding your individual business risks and finding the right type of coverage from all the different insurance options on offer.

While there is a broker fee to use their services, insurance brokers can save you time, effort, and money, especially if they can negotiate a better rate on your behalf.

If your needs go beyond business car insurance, brokers can also help you find a commercial car insurance policy.

What benefits should I look for in a business car insurance policy?

If you're considering a business car insurance policy, there are a few features you should look out for:

• Comprehensive cover: If you want to protect yourself against a wide range of incidents, a comprehensive policy can cover you for accidental damage to your car and to other cars and property, as well as theft and natural disaster.
• ​​Agreed value policies: These can be really helpful for vehicles with custom modifications or signage. Agreed value ensures you receive a predetermined payout that reflects the customised value of your vehicle.
• Flexible policy terms: Look for policies that allow adjustments if your business needs change, such as adding more vehicles or different types of coverage.
• Multiple driver coverage: Policies that allow you to list multiple drivers without excessive extra costs can be particularly useful for businesses where different staff members may need to drive the same vehicle.
• Hire car availability: Having the option to hire a car after an accident or theft, can allow your business to continue operating and move forward without significant downtime.

Whether it's a comprehensive policy with business cover or if you end up choosing a commercial policy – what you choose will depend on your individual needs.

FAQs

• Are business vehicles more expensive to insure?

  Generally, insuring a car for both business and personal use will come with a higher price point. This is because there's an assumption that the car will spend more time on the road and have a greater level of risk.

  However, many factors can affect the cost of car insurance, including the level of cover you choose, the age of your car, and its mileage.

• Do I need different insurance if I use my car for work?

  It all depends on how frequently you expect to use your car for work-related purposes and how your current insurer treats business use. If it's only on the odd occasion, a personal car insurance policy with business cover can cover you for a small adjustment to your premium. However, if you'll be using your car for work for the majority of the time, you'll need a dedicated commercial car policy.

• Do I have to tell my insurer if I use my car for work?

  Yes. If you're thinking of using your personal car for work, you should let your insurer know. Many personal car insurance policies will have cover included for occasional business use, but will need you to let them know first, and will usually adjust your premiums once you do.

  Using your car for business activities without telling your insurer can, in some cases, void your policy.

• Can I get car insurance for ridesharing?

  Many business car insurance policies won't cover ridesharing, but there are some exceptions. Some insurers will offer limited ridesharing cover for an extra premium and excess, including NRMA, which covers a maximum of 10 ridesharing hours covered. Other insurers, such as GT Insurance, have dedicated ridesharing car insurance policies.

  Make sure to ask your insurer if ridesharing is included in their business car insurance. If not, doing so might void your policy.

• Can my car insurance cover business tools?

  Some comprehensive car insurance policies cover personal items like tools, computers, and business gear. However, there's often a cap on what the insurer will pay for these, so be sure to check the PDS to see if the limits work for your needs.

  If you're in a trade and haul around a lot of essential tools, like pricey power or hand tools, and need higher coverage than usual, you might want to consider a commercial policy.

Written by

Cameron Thach

Insurance Content Writer

Cameron is the local insurance scholar at Finder. With a diverse background writing in independent education, web-3, and finance, his mission is to build helpful content and that speaks to readers in language they understand. See full bio