Business car insurance
A guide to business car insurance
Updated March 19, 2024
Expert tips on insuring your car for business use
Our car insurance expert, Adrian Taylor, has some helpful tips for getting your car covered for business use.
Adrian Taylor
Executive General Manager – General Insurance
Let your insurer know how you use your vehicle
Insurers approach the use of a vehicle differently and, depending on its use, may not be able to offer any cover at all. Be sure to let your insurer know how you intend to use the vehicle so that you get the right cover in place.
Switch car insurance at any time
You can switch car insurance at any time; just check for cancellation fees before you do! If you’ve paid a portion or all of your premium upfront, you’ll usually receive a pro-rata refund for the unused period of insurance.
If you can, purchase online
Many insurers offer a first year premium discount if you purchase your policy online. However, this means your premium for the following year is likely to automatically increase, so it pays to compare insurance at least once a year.
What is car insurance for business use?
Essentially, car insurance for business is a regular car insurance policy that includes provisions for business use as well as private use. The most important distinction is the purpose for which you’re using your vehicle and whether an insurer will cover it.
Australian personal lines insurers don’t always offer cover for business use in their car insurance options. This means it’s even more essential to check the relevant Product Disclosure Statement (PDS) before buying a policy for details on what’s covered. The Target Market Determination (TMD) may help you get a better understanding if the product is right for you, as well.
You could also ask your insurer whether they include cover for business-related incidents in their car insurance policies.
Which levels of car insurance cover include business use?
Whether your level of car insurance covers business use will depend on your policy and insurer. It’s important to check if business use is included in your insurance quote before you start using your vehicle for business purposes.
Generally, the following levels of car insurance can cover your vehicle being used for business purposes:
- Comprehensive car insurance. As the highest level of coverage, comprehensive cover would insure your car for damage you cause to a third party’s vehicle or property in an accident, as well as damage to your car. Comprehensive car insurance also covers fire, hail and storm damage, as well as theft and attempted theft.
- Third Party Fire and Theft. This policy covers you for damage you cause to a third party with your car. It also covers your vehicle for fire damage and theft, but not accidental damage.*
- Third Party Property Damage. Similarly to Third Party Fire and Theft, Third Party Property Damage doesn’t cover any kind of damage to your car.* Instead, it insures the damage you cause to other people’s property in an accident. Importantly, it will not cover your vehicle should it be damaged or lost due to theft or fire.
* Unless an uninsured third party was at fault and you can identify them.
What’s considered business use?
It’s important to understand what constitutes business use, particularly since car insurance providers may have different definitions. For example, if you sometimes use your own car to go get the office milk, lunch or supplies, this is unlikely to count as business use of your car.
However, if your job requires you to use your personal car regularly to complete daily work or business tasks, you may need to take out business vehicle insurance. You may consider this type of cover if you routinely drive between locations as part of your job (e.g. tradies), or you use your car to transport other employees or goods from one location to another (e.g. a sales representative).
Business use cover for my car
What does business car insurance cover?
Below is a summary of what’s typically included in each available level of cover.
| Level of cover | Comprehensive | Third Party Property | Third Party Fire and Theft |
|---|---|---|---|
| Damage to your vehicle | ✓ | ✗ | ✗ |
| Damage to other vehicles and property | ✓ | ✓ | ✓ |
| Theft and malicious damage | ✓ | ✗ | ✓ |
| Fire damage | ✓ | ✗ | ✓ |
| Storm damage | ✓ | ✗ | ✗ |
| Towing after an accident | ✓/Optional extra | ✗ | ✗ |
| Loss or damage to personal effects kept in car | ✓ | ✗ | ✗ |
| Emergency transport | ✓ | ✗ | ✗ |
| Some of the listed items will contain critical restrictions and limits. You should always consider the PDS to determine whether a product is right for you prior to purchasing. | |||
What does business car insurance not cover?
Use of a personal vehicle for business purposes will be subject to the same exclusions as the level of personal cover you take out; you can find these exclusions in your PDS. It’s vital to be aware of them so you know exactly how you’re covered in the event of an accident.
Typical exclusions are:
- Driving under the influence of drugs or alcohol
- Driving with an invalid licence
- Intentional damage to your vehicle
- Car racing
- Natural wear and tear, such as rust or mechanical failure
How do I get car insurance for my business car?
You’ll need to find an insurer that includes the use of the car for business purposes in their car insurance policies. Being honest when signing up for a policy about what you use your car for can help ensure you receive the right cover for your circumstances and helps the insurer determine if business use insurance is an option for you. Your insurer might ask you a couple of extra questions about the car’s use, including:
- Whether you’ll be using the vehicle for carrying passengers in exchange for payment
- If the car will be used to transport goods or make deliveries for a fee.
This is on top of other details, such as:
- The type of car
- Who’ll be driving it
- How old and what colour the car is
- The number of kilometres per year it’s driven
- If the car has been modified
- The type of coverage you want.
If you already have car insurance and want to add cover for use of your vehicle for business down the track, it’s best to contact your insurer directly to assess your options. If business use of a personal vehicle is something they offer, you’ll usually be able to amend your policy and adjust your premium accordingly. If they don’t offer this cover, you can compare car insurance with us to look for other policies and providers.
Important to know
Can my car insurance cover my business equipment?
Some comprehensive car insurance policies include coverage for personal effects, like tools, computers and business equipment. There’ll usually be a limit to how much the insurer will pay you out for these items, so refer to the PDS to ensure that these limits are sufficient for your needs.
If you’re a tradesperson and carry around a lot of tools that you require for your business needs (such as a suite of expensive power tools and hand tools), and you require a higher limit than what most policies offer, a commercial policy may be an option to consider.
Can I get car insurance for ridesharing?
Many car insurance policies don’t cover ridesharing, but there are some that do. You should check whether your insurer will cover incidents that occur while ridesharing and inform them that you’re carrying people as a service in your personal car.
You can learn more about car insurance for rideshare driving here.
Is car insurance for business use more expensive?
Generally, car insurance that covers both personal and business use can be more expensive than a personal use policy of the same level of cover. However, there are many factors that can influence the price of car insurance.
Is business use car insurance the same as commercial vehicle insurance?
While the two are similar, business use of a personal vehicle isn’t the same as commercial motor vehicle insurance. While both provide cover when a vehicle is used for work purposes, commercial insurance policies protect small business vehicles to large business vehicles that are used mainly in the workplace or for work purposes only, not for personal use (with some exceptions).
Commercial car insurance is sometimes offered as a stand-alone product and can also insure numerous vehicles under one policy (which is referred to as a fleet policy).
You’d typically consider commercial motor insurance when:
- A business needs to insure numerous vehicles under one policy document
- A vehicle is transporting or carrying goods of high value that you want to protect (e.g. tools of trade)
- The vehicle is used for rigorous work
- The vehicle is not a passenger car (e.g. a forklift, heavy truck or tractor)
Meet our car insurance expert, Adrian Taylor
As Executive General Manager of General Insurance at Compare the Market, Adrian Taylor is passionate about demystifying car insurance for consumers, so they have a better understanding of what they’re covered for. Adrian’s goal is to make more information available from more insurers, to make it easier to compare and save.