By Stephen Humphriss, director UKCDT
INSURANCE. We all need it for our cars. But what about car insurance for business use?
‘Use of a car’ is one of the most confusing subjects within the insurance industry; in fact there are five different uses all of which can affect policy cover, premium and indemnity.
It is a trap that many fall foul of, in most cases innocently.
With more car insurance being arranged increasingly via the internet, the risk of not obtaining the correct class of use is greater.
Below are the five classes of car insurance:
- Social Domestic & Pleasure
- Social Domestic, Pleasure to include commuting (to a fixed place of employment)
- Class one business use
- Class two business use
- Class three business use
These five classes of car insurance exclude hire, both private and public, for which you will need specific hire car insurance under a commercial car policy.
“There are some reports that suggest around 5 million cars are on the road insured but have the wrong class of use – effectively making them ‘uninsured’.” Steve Humphriss, director of UKCDT.
So what are these uses in lay terms?
Social Domestic and Pleasure. This is pure private use; no business use at all, not even to go to work.
Social domestic, pleasure to include commuting. This is the same as the above, but includes going to one place of work only. So if your employer asks you to go to another place of work – this can be other premises owned by your employer, the bank possibly, or to a training course – you are then using your car uninsured. The ramifications of this need not be rehearsed here.
So far so good. It’s all been relatively self-explanatory. But this is where it gets complex.
Class one business use. This includes all of the above plus, you personally (some insurers may include spouse here as well, not partner but spouse) may use the car for YOUR business. Not an employer’s business, but yours. Depending on the insurer, this may exclude carriage of goods and samples and may also exclude business calls made without a prearranged appointments – in other words what used to be called commercial travelling.
Class two business use. This is all of the above and is the main use for the company car market as this includes business use of the employer, such as going to see clients, going on a course, going to the bank or post office but again can exclude commercial travelling.
Class three business use. This embraces all of the above and includes commercial travelling (visiting clients, agents and the like without a pre-arranged appointment).
All insurance companies have their own particular slant on all of the above, so the chance for confusion is great. If in doubt read the policy wording on your own business car insurance documents. If you remain unsure that you have the right class of use, it’s best to check with your own insurers, or your insurance broker if you use one – they will also be able help with other questions you may have regarding your business and company car insurance.
This information was sourced from GSi Ltd Insurance Brokers at Rushden and are generalised use descriptions. GSI does advise that these can vary between insurers. It is best advice to check with your insurance company to clarify any issues or questions you may have regarding your own car insurance policy.
UKCDT is a driver development company: www.ukcdt.org