What is business car insurance?

What is business car insurance?

Do you have a small business that you work part-time, such as a catering business or a home-based sales franchise where you need to use your personal vehicle?

Whether it’s a passion project or a way to supplement your income, if you plan to use your personal vehicle for business purposes, you may want to consider buying a business car insurance policy. You will usually be covered for business-related items like tools or products damaged or stolen while in the car. If you later choose to expand the business, making it your primary source of income, you may need to switch to a commercial car insurance policy.

When do you need business car insurance?

You may consider buying business car insurance in Australia if you’re using your personal car occasionally for a side business that isn’t your primary income source. However, if you’re using your vehicle the majority of the time for work that pays the core of your income, you might need to buy commercial car insurance.

A huge difference between the two types of insurance is that most Australian insurers allow you to purchase car insurance for business vehicles directly from them. However, commercial car insurance is often only available via a licensed broker. Another difference is that you can usually purchase business car insurance online, but are unlikely to be able to do this with commercial car insurance.

Some business car insurance providers may also offer cover if you’re using your car for ridesharing services such as Uber. But this only applies if it is a secondary or part-time occupation.

When comparing business car insurance quotes, it’s useful to check whether this option is covered, or if you need to buy a specific ridesharing insurance policy.

Another thing to check is if you can only drive the car owned by you, and insured under a policy issued to you, for a ridesharing service. You should  remember that a business car insurance policy will only cover business items kept inside the car, but not special modifications or tools fitted to the vehicle.

How much does business car insurance cost?

Business car insurance policies usually only differ from personal car insurance policies in terms of the coverage offered for business items.

The cost of these policies can depend on the type of insurance and coverage you choose and can exceed $1,500 annually. For instance, a third party fire and theft insurance policy usually covers your liability for any damage to other cars in an accident where you are at fault, and protects your car for damage from fires and theft. You may also be able to add coverage for business items stored in the car to this policy when buying business car insurance. Your age, gender,  location, and choice of insuring the car for an agreed value or market value can affect the cost of the policy.

When you buy a car insurance policy for business purposes, you’ll likely need to provide documents which establish that you’re using the car only for a part-time business. You’ll also need to confirm the value of  items you keep in the car that are used as part of this business. If your business exposes you to a greater risk of your car suffering damage, your insurer may increase the premium or excess.

The business car insurance premium you pay may be higher if you let someone else drive the car or if you drive it for a purpose that is seen as dangerous, like car racing. If you use the car for a business purpose that is not part of your policy and the car is damaged, you’ll have to pay for any treatment or repairs yourself. You may want to read the insurance provider’s Product Disclosure Statement (PDS) to get a sense of what all is included and excluded.

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Learn more about car insurance

Can you insure your car for 6 months?

Most Australian insurers won’t offer you a 6-month car insurance policy, so you may need to buy a policy that covers your car for damages and cancel it after six months. You will need to purchase comprehensive car insurance to protect your car from accidental damage, theft, vandalism, or natural disasters.. 

Consider checking whether your 6-month comprehensive car insurance will cost more if you pay monthly or six-monthly premiums instead of a one-time annual premium. Another question to ask the insurer is whether you’ll need to pay administration or cancellation fees when you cancel the policy.

Alternatively, you can look for a suitable ‘pay as you drive’ car insurance policy, which usually offers you the coverage of a comprehensive car insurance policy but only requires you to pay for the distance driven. Such a policy may not be the ideal 6-month car insurance plan as it is based on how much you drive rather than for how long. If you need to drive a lot, you may end up paying more than you’d pay for regular car insurance. 

Does insurance cover a stolen car if keys were in the car?

A car insurance policy that covers the theft of your car, such as third party fire and theft insurance, usually covers a stolen car, even if the keys were in the car’s ignition.

However, your insurer may deny the claim if you live in an area where there have been several car robberies reported recently. They will see you leaving the keys in the car as a case of negligence. In such cases, your insurance provider may even expect you to have installed anti-theft security measures in your car. 

You may need to confirm whether or not you left your keys in your car, and if they had been stolen or misplaced, before filing your car insurance claim. The loss or theft of your car keys may be covered by a comprehensive car insurance policy, but usually as an optional item.

If you can confirm that your car keys were stolen, mention this in your claim as this will help establish that your car was not stolen as a result of your negligence.

Can I drive a new car without insurance?

It is illegal to drive a car in Australia without insurance. Most states require that you get your insurance in place before you drive the car off the dealership’s plot. So, the answer to whether driving a new car without insurance is no, it is not allowed.

The only time you can possibly legally drive an uninsured car is when you have to get the vehicle registered. You should drive straight to an inspection station or your state's vehicle registry. You must also make sure that you take the most direct or convenient route possible.

It is important to note that your compulsory third party insurance (CTP or green slip) isn’t valid until your car is registered.

Driving an unregistered or uninsured vehicle can have severe legal repercussions. If you are involved in an accident, and are driving an unregistered and uninsured vehicle, you will be personally liable to pay compensation to anyone hurt, as well as for damages. If you are caught driving a vehicle without insurance, you may be fined or even have your vehicle seized.