Guide
Business use car insurance: do you need it?
If your car earns money, its insurance has to know. Using a private car for work, putting a car in the company’s name or giving staff a car to drive all change the policy you need. Here is how insurers treat business use, the duty you owe when you answer their questions, and when a commercial policy is the better fit.
- Private, business and company use explained
- The duty you owe when you answer
- When a commercial policy fits better
What business use means for car insurance
Insurers price a car on how it’s used. Moneysmart says insurers consider who will be driving it, how often and how far it’s driven, where you live and where the car is kept. So when an insurer asks whether a car is used for business, the answer is part of the price and part of the contract. If the car is used for work in a way the policy doesn’t allow, a claim can be reduced or refused.
A car owned by a company, used mainly for work or driven by staff usually belongs on a commercial motor policy in the business’s name. A personal car used now and then for work may stay on a private policy, provided the policy allows that use and you’ve told the insurer.
Which policy fits
| Situation | Usual fit |
|---|---|
| Personal car, driven to one workplace | A private policy. Many policies treat commuting as private use, but check the definition |
| Personal car used for client visits or carrying tools | A private policy that allows business use, declared when you buy, or a commercial policy |
| Car owned by your company or trust | A commercial motor policy in the business’s name |
| Car driven by employees | A commercial policy that lists or allows the drivers |
| Ute or van used for a trade | A commercial motor policy, with tools cover added separately |
| Rideshare or delivery driving | A policy that covers rideshare or delivery use, which most private policies exclude |
The duty you owe when you answer
For a private car policy, which is usually a consumer insurance contract, the Insurance Contracts Act 1984 asks you to take reasonable care not to make a misrepresentation. That has applied since 5 October 2021, and it means answering the insurer’s questions about use honestly and carefully.
A commercial motor policy for a business is not a consumer contract, so the traditional duty of disclosure applies. You must tell the insurer anything you know, or a reasonable person would know, is relevant to its decision to insure you and on what terms. A broker will ask about use, drivers, garaging and claims up front so nothing is missed.
What business car insurance doesn’t cover
Compulsory third party insurance is separate. Moneysmart explains that CTP covers injuries to people caused by your car, and does not cover damage to cars or property. Comprehensive cover is what pays for your own car and other people’s property.
Tools and stock in the car usually need their own cover. Vehicle policies tend to include only a small amount for contents, so a tradie’s tools belong on a tools and equipment policy.
Compare business car insurance
Business use car insurance questions
Do I need business car insurance if I use my car for work?
You need a policy that allows how you use the car. Some private policies allow limited business use if you declare it. If the car is owned by your business, driven by staff or used mainly for work, a commercial policy is usually the better fit.
Is driving to work business use?
Often not. Many policies treat travel between home and one regular workplace as private use, but each insurer defines business use in its PDS, so check the wording.
What happens if I don’t tell my insurer I use my car for business?
If the use is relevant and you didn’t take reasonable care to answer accurately, the insurer may reduce or refuse a claim. Answer the use questions carefully.
Does company car insurance cost more?
It can, because business use usually means more driving and more drivers. It depends on the car, the drivers, where it’s kept and the claims history.
Can I compare business car insurance online?
Yes. A single car, ute or van used for work can be compared online. Two or more vehicles, or trucks, are arranged by a broker as a fleet.
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Sources
Business use