Business Car Insurance

What is Business Car Insurance?

Business car insurance, or business vehicle insurance, covers risks associated with vehicles used for business purposes. The type of insurance you need depends on how your vehicle - or vehicles - is/are used. Car insurance for business use falls into two broad categories:

• Personal car insurance with business use: This is suitable if you use your private vehicle for business activities, such as couriering items to your - or other businesses’ - customers.

• Commercial car insurance: This is designed for vehicles used exclusively for business purposes, including specialised vehicles like forklifts or cement trucks.

These policies are in addition to Compulsory Third Party (CTP) insurance, which is mandatory for all registered vehicles in Australia that travel by road.

Private vs business car insurance

• Private car insurance covers your personal use of your car only. Any car insurance business use activities may require additional cover.

• Business car insurance specifically covers vehicles used for your business operations.

Is personal car insurance cheaper than business car insurance?

Personal car insurance policies are tailored for private individuals, their personal needs, and their typical driving habits. In contrast, business vehicle insurance policies are designed to protect vehicles used for commercial activities, such as transporting goods or visiting clients at various locations. 

Car insurance quotes for business vehicles vary greatly. For example, insuring a ute for personal use can cost around $150 per month in NSW. 

This premium will rise if the ute is sometimes used for business purposes - such as carrying landscaping gear to a work site. Your business car insurance quote would of course, be specific to your circumstances.

If the ute becomes a full-use business vehicle, the premium will rise even more, due to the added risk of the vehicle being on the road for longer. 

You could end up paying over $200 a month, though there may be a tax advantage that mitigates the added cost.^^

These differences in costs depend on various factors specific to your vehicle and your insurance policy. Business car insurance may have higher premiums due to the higher perceived risks. On the other hand, these premiums may offer a tax advantage you can discuss with your financial advisor.

What’s the difference between Business car insurance and Commercial car insurance?

The differences are significant, and a few examples appear below.

Business Car Insurance:

• Extends your private car insurance to cover your business use.

• Is necessary if your car is used for business operations (e.g., real estate agents, tradies, couriers, etc).

• Requires you to inform your insurer about your business usage to ensure your cover remains valid.

Commercial Car Insurance:

• Covers vehicles used exclusively for business purposes.

• Is suitable for a variety of vehicle types, including cars, vans, utes, and specialised vehicles like forklifts, minibuses or tractors.

• Can cover a fleet of vehicles under one policy.

What does business car insurance cover?

Business car insurance can cover various risks, such as repair costs for your vehicle or damage to someone else’s property. Specific cover details depend on your policy and your provider but typically include:

• Third party property damage only, which covers damage to others' property.

• Third party property damage including fire and theft: Covers damage to others' property and protects your vehicle from fire, theft, and uninsured third-party damage.

• Comprehensive business car insurance cover: Includes third-party cover as well as additional protections, like:

• Accidental damage (even if you’re at fault)

• Personal item loss inside the vehicle

• Loss of tools of trade

• Damage to vehicle signage

• Vehicle replacement for a total write-off

• Emergency repairs, travel, and accommodation

• Towing and storage costs

• Vehicle hire costs after theft

• Payoff of financed/leased vehicle amounts following total loss

What does business car insurance not cover?

Policy restrictions vary by provider and policy, but the most common exclusions are:

• Use of certain vehicles and uninsured purposes (e.g., taxis, rideshares, emergency vehicles).

• Damage or loss if your vehicle’s driver is under the influence of alcohol or drugs.

• Theft or loss due to inadequate vehicle security.

• Loss of income/revenue from insured events.

• The vehicle was already damaged, unsafe, or unroadworthy.

• Damage from general wear and tear.

• Risks already covered by your CTP insurance.

How do you take out business car insurance?

The typical process is as follows:

• Compare options online or apply directly with an insurer.

• Some providers offer discounts for online purchases.

• For specialised policies, consult a car insurance broker.

• Provide detailed business and vehicle information for a quote.

• Select your best quote, and proceed with payment.

• Once payment is processed, your business vehicle is covered - though you’re able to cancel during the cooling-off period without penalty.

Can you insure your car under your business name?

• Your vehicle must be insured under the registered name of the owner - if that’s your business, then the insurance certificate must match this. If it’s you as an individual, then that’s the way you’ll need to insure it.

• Insurance providers may list your associated business name on the policy. There may be an additional cost to add your business.

Is business car insurance mandatory?

• CTP insurance is mandatory for all registered vehicles. Other business car insurance types are not mandatory, but they do offer protection against unexpected costs and disruptions. 

• Rideshare drivers should review their insurance needs with their provider.

Business car insurance is essential for protecting the vehicles you use in your business operations. Whether extending personal insurance for business use or opting for dedicated commercial insurance, it's important to understand the inclusions of your car insurance cover, any exclusions, and the costs involved. 

Always compare options and read your policy documents carefully to ensure adequate protection for your business needs.

Sources

https://www.allianz.com.au/business-insurance/articles/personal-vs-commercial-vehicle-insurance.html

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/insurance-duty/small-business-exemption

https://community.ato.gov.au/s/question/a0J9s0000001GR 5/p-00039481

https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/insurance-duty/small-business-exemption#heading2

^^Ute insurance calculations made for a 2023 Toyota Hilux ute drive by 53 year old male driver in NSW and created via CBA’s insurance quote tool on 12 May 2024: https://www.commbank.com.au/insurance/car-insurance

Paul Coughran is the General Manager of Emerging Verticals at Compare Club. Paul has over 20 years of experience across a wide range of industries including Banking and Finance, Telecommunications and Energy. Paul leads a team of trusted experts dedicated to helping individuals make informed decisions about their insurance and utilities needs.

Meet our car insurance expert, Paul Coughran

Paul's top car insurance tips

• 1

  Regularly compare your insurance policies – You could be paying for cover you don’t need. Shopping around every so often can save you a fair bit, maybe even hundreds each year.

• 2

  Don’t just look at the premium—check the excess too. While a higher excess might bring down your premium, remember you’ll have to fork out more if you do need to claim.

• 3

  Double-check what’s included in your policy. Extras like windscreen cover or roadside assistance might not be part of the deal and could cost you more.

• 4

  If you don’t drive much, consider usage-based insurance. Some policies base your cost on how much you actually drive, if you work from home or only use your car for short trips this might be a much better option.