Summer is all about road trips, weekend getaways and piling into a car with your mates for festivals or beach days. And naturally, it makes sense to split the petrol money, right?
But here’s the thing. If you’re charging friends too much for lifts, you could unknowingly void your car insurance.
Why overcharging could be a big problem
According to car insurance experts at MoneySuperMarket, asking your mates to chip in is totally fine as long as you’re not making a profit. But the moment you charge more than the actual cost of the journey, insurers might see that as a commercial activity, and that’s where trouble starts.
Even something as small as asking for £10 when their fair share was £5 could be seen as making a profit. That small mark-up could push you into the hire and reward category, which is basically transporting people for money. Standard car insurance doesn’t cover that.
What happens if you're in an accident?
If you’re involved in a crash while technically operating for profit, your insurer could:
- Reject your claim
- Cancel your policy
- Refuse to cover damages or injuries
- Report you for uninsured driving
In short, you could be left with a massive bill, points on your licence, or even face prosecution. Not ideal for saving a few quid on petrol.
So what can you do?
MoneySuperMarket says the difference between cost-sharing and making money is clear.
Allowed: Splitting fuel and wear-and-tear costs fairly
Not allowed: Charging more than the trip actually costs or offering lifts to strangers for cash
How to work out the right amount
If you’re unsure what to charge, use the HMRC mileage rate. It’s currently 45p per mile and covers fuel, insurance, servicing and general wear and tear. You can also find free fuel cost calculators online to help work it out.
Don’t do this if you want to stay Insured
MoneySuperMarket also warns against a few other red flags.
- Regularly giving paid lifts to people outside your household
- Advertising lift services on social media or forums
- Using your car to make money without the right insurance
If you’re planning to drive for Uber or start doing deliveries, you’ll need specific business use or hire and reward insurance. Otherwise, you’re not properly covered.
Before your next road trip or night out, double check your insurance and make sure everyone’s paying their fair share. A few extra quid isn’t worth the risk of losing your insurance completely.
