A complete guide to business and commercial car insurance

So, you know how car insurance works for your own set of wheels - the ones you use to drive to the shops or for road trips, but what about for your company car? Or your delivery truck? How does car insurance work for a vehicle used for work purposes?

Well, first things first and that’s that when we talk about car insurance for work vehicles, there are two types to consider. These are business car insurance and commercial car insurance.

Also known as ‘business use car insurance,’ business car insurance covers you if you use your car for both personal and business purposes. So, it’s basically personal car insurance that allows for the fact that your car may be on the road more often and as a result may need to be serviced more. People who might drive a car on and off the work clock include real estate agents, service workers and tradies.

Now, while business car insurance can be used for cars that are driven in and out of business hours, commercial car insurance is solely for vehicles used for work purposes. This could be a delivery van or fleet of vans if you run a delivery business, a ute, a trailer or even heavy duty vehicles like cement trucks. 

Besides your usual compulsory third party insurance, there are three types of optional business and commercial car insurance available including:

• Third party property damage car insurance
• Third party fire and theft car insurance
• and comprehensive car insurance.

For business use car insurance, you can pretty much purchase a standard car insurance policy and put the use as ‘business.’ Just be careful because some insurance providers either do not offer business car insurance or only offer a limited amount of cover.

Commercial car insurance is another story altogether, however, as this can often only be purchased through a licensed broker. That is a car insurance broker who can compare policies for you and give you advice on which one might be more suited to your commercial needs.

When you take out a car insurance policy, whether it be third party or comprehensive, the provider will usually ask whether you will be driving for business or personal use. If you select business use, that doesn’t mean that you can’t drive your car for personal reasons. On the contrary, it simply means that you can do both.

In effect, business car insurance actually provides more cover than personal car insurance, as it is designed to be an extension of personal car insurance. So, for example, if you only opt for personal insurance but your wheels are damaged while driving for work, your insurance provider may not cover you.

Is business car insurance more expensive than personal car insurance?

As insurance is all about risk, it is likely that business car insurance premiums will be higher than personal car insurance premiums. 

If you drive your car for work, then you probably drive it more than you would if you were just using it to commute or go grocery shopping. More time on the road means a higher chance of getting a flat tyre or even being in an accident, making it more likely that you will claim. This is really what providers are concerned about.

That said, the cost could wind up being higher in the long run, if you don’t take out business car insurance and you have to make a claim for something that happened while driving for work.

Understanding private, business and occasional  

When getting a quote or trawling through car insurance PDS documents, you may notice the wording ‘private and occasional business use’ and ‘private and business use.’

Generally speaking, private and occasional business use is for anyone who uses their car to commute and occasionally for work purposes, say driving to a meeting a few times a month. This type of use means that the car is not essential to earning an income. 

Private and business use, on the other hand, covers domestic use as well as commuting and driving for work purposes. Although this does not necessarily include ridesharing, delivery or driving tuition services.

Business car insurance: General exclusions

Although a number of insurance companies do offer business car insurance, there are a number of exclusions that can apply to these policies. Some more common exclusions include:

• Ridesharing or taxi-driving. Even with business car insurance, a lot of insurance providers exclude cover for ridesharing or taxi-driving services, such as Uber or Ola. That said, there are a few providers that offer ridesharing insurance separately.
• Using your car to make deliveries for payment. Most business car insurance will not cover you for delivering goods for payment. So if you’re running a delivery service, you may want to consider commercial car insurance.
• Conducting driving lessons for payment. If you are a driving instructor and you use your car to conduct driving lessons for a fee, then you may not be covered under business car insurance.
• Hiring your car out to others. Most business car insurance will not cover the use of your car as a rental vehicle.

Which insurance providers offer business car insurance?

Some providers that offer business car insurance include:

• AAMI
• Budget Direct 
• Qantas Insurance
• QBE
• Suncorp
• Stella
• Virgin Money 
• Woolworths
• Youi

The level of cover each of these providers offer for business use car insurance will vary, so make sure you read the product disclosure statements carefully before signing up to anything.

Unlike business use car insurance, commercial car insurance is designed to exclusively cover vehicles used for business purposes. Types of vehicles that are usually covered by commercial car insurance include utes, 4WDs, vans, heavy duty trucks, trailers, forklifts and buses.

Commercial motor insurance vs. commercial motor fleet insurance

There are two types of commercial car insurance, commercial motor insurance and commercial motor fleet insurance (fleet insurance for short). The first option is designed to insure a standalone vehicle, whereas the second is for a whole fleet (usually at least 15 vehicles).

What about legal liability for commercial motor insurance?

Just like any car insurance policy, commercial motor insurance comes with a certain amount of legal liability cover. This can vary from policy to policy but can be as high as $35 million. Although it should be noted that if you are transporting dangerous goods, it could also go as low as $1 million.

How much does commercial car insurance cost?

As with most insurance policies, how high or low your premium is will depend on your individual needs and claims history. Some factors that your insurance provider will take into consideration include:

• The value of your vehicle/s
• Where your vehicle/s are usually parked
• Whether you opt for third party, third party fire and theft or comprehensive insurance
• What the claims history is for your company and for individual drivers
• Whether you are insuring one vehicle or a fleet
• What accessories you need to cover, such as trailers 

Want more information on how car insurance works? Why not head to Mozo’s car insurance guides hub. Or if you want to get started comparing policies, check out the offerings below.