Business car insurance

What is business car insurance?

Business car insurance, or business vehicle insurance, is a type of policy that’s designed to cover risks related to a vehicle that’s used for business purposes.

There are two types of business car insurance that may be suitable, depending on your situation:

• Personal car insurance that covers ‘business use’ may be appropriate if you use your private vehicle for business purposes.
• Dedicated commercial car insurance is a type of policy generally designed to cover more specialised vehicles that are used solely for business purposes.

These kinds of policies are in addition to compulsory third party (CTP) insurance, which is mandatory for all vehicles registered in Australia. Keep in mind that CTP insurance costs can vary across states and providers.

Compare Car Insurance

What is the difference between business and commercial car insurance?

Business car insurance

Extending your existing private car insurance for business use may be useful if you use your car in the course of operating a business. For example, if you are a real estate agent or a tradie.

Private car insurance doesn’t normally cover you for business use, apart from driving to and from your place of work. You will need to tell your insurance provider if you intend to use your car for business. If you don’t, then you might not be covered if you have an accident.

Insurance providers that allow you to extend your private car insurance to cover business use may vary in how they define what business use is. It’s important to clarify this by speaking with your provider and reading the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the policy to make sure the cover is suitable for your situation.

Commercial car insurance

Commercial car insurance is often used to cover vehicles that are exclusively used for business purposes, like for a flower delivery company. Depending on the provider, commercial car insurance may also be used to cover a fleet of vehicles under one policy.

Commercial vehicle insurance policies are typically designed to cover a wider range of vehicle types. including cars, vans, utes, and heavier or specialised vehicles such as forklifts, bulldozers or tractors.

If you need business insurance to cover risk and protect assets such as customers, employees, business owners, earning and vehicles, then the Australian Government’s business support website says it can be a good idea to ask providers if they offer insurance packages tailored to your business. Depending on your requirements, this may be cheaper than taking out separate policies.

→ Looking to buy a work vehicle? The instant tax write off explained

What does business car insurance cover?

Business car insurance is designed to cover you from a range of risks, such as the cost of repairing damage to your vehicle or someone else’s property.

The exact kind of protection you get from a business car insurance policy depends on what options you chose and the level of cover you take out.

Any inclusions and exclusions are generally similar to those that come with a car insurance policy taken out for private use. There may be extras you can choose from that offer greater protection, but they may also add to your premium costs.

The cover offered as part of a commercial car insurance policy tends to be more specialised, particularly in the case of a comprehensive policy.

Below are some examples of what may be covered, based on the policies of a number of providers in Australia. What’s actually covered by a policy can vary considerably from provider to provider, so it’s worth double checking the inclusions, exclusions and limits by reading any PDS and TMD documents.

Third party property damage only

This covers you if the vehicle(s) insured cause damage to someone else’s property.

Third party property damage including fire and theft

This covers damage caused to other people’s property, as well as loss or damage to your vehicle(s) resulting from events such as fire, lightning, explosion, theft or attempted theft. Some policies may also cover damage to your vehicle caused by an uninsured third party.

Comprehensive cover

Comprehensive commercial car insurance covers everything included on the other cover levels, as well as a variety of additions that will vary depending on the provider. Some of the additions covered and other features on offer may include:

• damage caused to your vehicle in an accident even if you’re at fault
• damage or loss of personal items inside the vehicle as a result of an insured event
• damage or loss of tools of trade
• damage or loss of signage, such as advertising that forms a permanent part of the vehicle
• replacement of your vehicle with a new one of the same or similar type if your vehicle is declared to be a total-write off
• emergency repairs required after an insured event to get the vehicle to its destination or to a repairer
• emergency travel if the vehicle is deemed unroadworthy following an insured event
• emergency accommodation if needed following an insured event
• towing and storage costs incurred following an insured event
• vehicle car hire costs following theft of the insured vehicle
• payout of any amounts owing on financed or leased vehicles following a total loss.

Keep in mind that what’s included and what’s not could vary from provider to provider and across their different policies. It’s important to read the relevant policy documentation when comparing your options.

What does business car insurance not cover?

Business use car insurance or commercial car insurance policy exclusions will depend on the level of cover you take out and the insurance provider you choose.

Some potential exclusions may include:

• certain kinds of vehicles and their commercial or business purpose, like taxis, rideshares (although there may be possible to get rideshare car insurance via some providers), emergency vehicles and heavy vehicles operated by a driver below a specified age
• damage or loss incurred if the driver of the vehicle is under the influence of alcohol or drugs
• theft or loss if reasonable care has not been taken to secure the vehicle
• loss of income or revenue resulting from an insured event
• claims made if the vehicle was already damaged, unsafe or unroadworthy
• damage resulting from general wear and tear
• risks that are covered by CTP insurance.

Other exclusions and limits may apply. Check with your provider or read the policy’s PDS and TMD for more details.

Business car insurance FAQ

How do you get business car insurance?

Depending on the type of policy you’re looking for, you may be able to compare options online or apply directly with an insurance provider. If purchasing online, many providers offer a first year discount for doing so. For more specialised or complicated policies, you can discuss your needs with a car insurance broker who can recommend providers. As part of the application for business car insurance, you’ll usually be asked to provide detailed information about your business and the vehicle(s) being insured. Based on this, the provider will give you a quote outlining what they’ll cover and at what cost.

Can you insure a car using a business name?

According to a number of insurance providers we’ve researched, the vehicle will need to be insured under the same name as it’s registered. If the vehicle is insured in the name of a person, the insurance provider may still request that the name of the associate business be provided. This may also be listed on the policy. For example, even if the vehicle is insured under a person’s name, any business use cover may only extend to activities carried out for a specific named business.

What is the difference between private and business car insurance?

Private car insurance is designed to cover a vehicle that is used for personal use. Private car insurance typically does not extend to covering business activities, unless you specify that the vehicle will also sometimes be used for those purposes, and the provider offers business use cover. Business use cover, or specific commercial car insurance policies, are designed to cover vehicles that are used in the course of running a business.

Is personal or business car insurance cheaper?

The cost of both personal and business car insurance policies depend on a range of factors specific to the vehicle and the person or business insuring them. Which ends up being more expensive can vary on a case by case basis. If you’re adding business cover to a private car insurance policy (depending on the type of business activity) the insurance provider may decide that this adds to the risk that you will need to make a claim. If this is the case, then it’s likely that the premium will be higher than a policy solely covering the driver for personal use.

Is business car insurance mandatory?

If it’s registered to be driven on the road, your vehicle needs to be insured under at least a CTP policy, regardless of where in Australia you live or do business. Other forms of business car insurance are generally not mandatory but can be valuable in protecting your business from unexpected costs or disruption if your vehicle is lost or damaged. If you’re considering becoming a rideshare driver, it’s also important to review your car insurance and talk to your provider.

Cover image source: Mino Surkala/Shutterstock.com.