Does personal car insurance cover commercial use?

Taking out car insurance is a responsible action. Depending on the cover you choose, you will protect both yourself and anyone involved in an accident with you.

However, what happens if you use your car for commercial purposes? We have a look at the impact of different uses of a car on your insurance, and we specifically consider commercial use.

Tip: Find out whether you can get car insurance for commercial purposes.

The different uses of a car, and insurance

According to Caron Whitfield, head of marketing and distribution, it’s very important to let your car insurer know what your vehicle will be used for. Most personal insurance policies provide cover if you use the vehicle for one or all of the following reasons:

• Social use: This means you can use the vehicle for private and pleasure purposes, for example, going to the shop, taking the kids to school, and going on holiday.
• Private and professional use: This means the cover includes social use, but is also extended to include professional purposes like travelling to work and back.
• Business use: If the nature of your job means that you spend more time in the car than you do in the office, you need to have your vehicle signed up for business use. For example, salespeople, real estate agents, and reps will choose this option.

READ MORE: These factors will cause your car insurance excess to fluctuate

What about the commercial use of a vehicle?

“Nearly all personal policies will not provide cover for vehicles that are used for commercial purposes. Commercial use is when your vehicle is used as a tool of your trade,” Whitfield says.”

She points out the following examples that won’t be covered by a personal policy:

• Vehicles that are used to carry goods or business equipment, such as plumbers, building contractors, and delivery companies.
• Vehicles used as Uber, Bolt, taxi, or shuttle services.
• Carrying fare-paying passengers, which includes school transport but excludes lift clubs.
• Driving instruction for reward.

Racing in contests, rallies, or trials would also be excluded.

Ayanda Mazwi, senior assistant ombudsman at the Ombudsman for Short-term Insurance, points out that a vehicle can specifically be insured for commercial purposes.  

“The appropriate category under which to insure the vehicle will depend on the individual underwriting criteria or guidelines of a particular insurer,” says Mazwi.

“Some insurers will cover a vehicle that is periodically used for business under a personal policy. The cover, however, may be subject to specified terms and conditions, for example, the frequency of business use or a nominated driver,” says Mazwi.

She points out that, depending on the risk factors, an insurer may require that the vehicle be covered under a commercial policy.

“Our advice to consumers is to give the insurer or broker full details of the vehicle use so that it is covered under the correct category to ensure a valid policy,” says Mazwi.

Whitfield says that if you are in any doubt as to what class of use should be noted on your policy, it's best to contact your broker or financial advisor.

Get a car insurance quote today to find out under which category your vehicle should be insured.