What is commercial car insurance?
Commercial car insurance is designed for vehicles used to earn money, such as those operating in taxi services, goods deliveries or construction work. Policies typically cover vehicles such as:
There are three main types of commercial car insurance, which include:
- Third party: the minimum legal requirement in the UK. This covers injuries to other people and damage to their property caused by your drivers. It ensures a vehicle is road-legal but does not usually cover damage to your own vehicle.
- Third party fire and theft: includes third-party cover plus protection if a vehicle is stolen or damaged by fire.
- Comprehensive: offers the widest protection, including third-party, fire and theft cover plus optional extras such as tool cover and passenger protection.
Within comprehensive policies, employers can often add tailored cover, such as:
- Employers’ liability: a legal requirement for most UK businesses with employees. It covers claims from employees if they are injured or become ill as a result of the work they do for you. While essential for any business employing drivers, this is typically a separate business insurance policy, although it may be bundled with your vehicle insurance.
- Tools cover: important for tradespeople and businesses relying on equipment. It insures items such as power tools, ladders or cleaning equipment, providing cover in case they are stolen or damaged while stored in a vehicle.
- Public liability insurance: essential for taxi services or jobs in which staff regularly carry passengers. It provides cover for claims made by members of the public (including paying customers) for injury or property damage related to your business operations.
Commercial policies also vary depending on how vehicles are used. Dedicated commercial vehicle policies are categorised by their specific function. It is important for businesses not to confuse this with the ‘Class 1, 2 and 3’ system, which applies only to those using private cars. The correct classifications for commercial vehicles include:
- Carriage of own goods: for tradespeople such as plumbers or builders carrying their own tools and equipment
- Carriage of goods for hire or reward (Haulage): for businesses such as couriers or delivery drivers who transport goods for other people
- Private or public hire: for taxi, minicab and other transport services
Who needs commercial car insurance?
Employers or self-employed professionals whose staff drive vehicles for work may need commercial car insurance. Jobs that typically need this type of cover include:
- Delivery van drivers
- Businesses or sole traders using vans for occasional paid work
- Couriers and delivery drivers
- Passenger services such as taxi firms or coach companies
- Agricultural and forestry vehicle drivers
- Plant and construction vehicle operators
- Specialist vehicles such as ambulances or mobile shops
If employees drive their own private vehicles for work, the business may not need to provide insurance coverage on their behalf. However, employers must ensure staff hold the minimum legal level of insurance. Under UK legislation, third-party cover is a legal requirement.
How much does commercial car insurance cost?
The cost of commercial car insurance depends on several factors. Businesses may require different types of cover depending on their activities. Common cost factors include:
- The type of vehicle(s) to be insured
- The number of vehicles your business operates
- The type of work employees carry out
- The level of cover required
- The locations where vehicles are driven or used
- Whether premiums are paid monthly or annually
Where to find commercial car insurance
In the UK, many insurance providers offer commercial vehicle cover. When comparing policies, employers may consider factors such as:
- Overall costs and whether discounts are available for annual payments
- Whether the policy meets all business requirements, such as tool cover or passenger protection
- Suitability for the roles your employees carry out
- Cover for the specific types of vehicles in your fleet
- Flexibility to customise policies as your business needs change
- Additional discounts or benefits offered by the insurer
Using an insurance broker
Insurance brokers can help businesses secure the most suitable deal on commercial car insurance. A specialist broker with experience in your sector may be particularly valuable, as they understand the risks associated with different vehicle types and industries. A broker might:
- Conduct a needs assessment to match policies with your business operations
- Offer risk management advice such as managing a taxi fleet or maintaining construction worker vehicles safely
- Explain policy options clearly and highlight the benefits of different levels of cover
- Provide market insights and recommendations if your circumstances change, for example when expanding your fleet or growing your business and employing more staff
Businesses may need commercial car insurance if they have taxi fleets, delivery drivers and construction vehicles. How much it will cost you depends on the size of your fleet, the types of vehicle you need covered and more.
