When it comes to insuring your company car, as the owner-director of your small business, the responsibility usually falls on you. Typically, if your company owns the vehicle, you’ll need to arrange company car insurance under a fleet insurance policy. This type of insurance covers both business and private mileage for your employees.
Fleet insurance is designed for businesses that have two or more vehicles. Instead of paying multiple premiums for each vehicle with different renewal dates, fleet insurance simplifies things. You can renew the insurance for all your vehicles at the same time and pay a single premium, reducing administrative tasks.
Fleet insurance covers all classes of vehicles owned and operated by your company for its business operations. This includes company-issued cars used by your employees, as well as taxis, motorcycles, minibuses, HGVs, trucks, and plant used on construction sites.
Similar to private car insurance, fleet insurance is available in three levels of cover:
1. Third party: Covers your business if others claim against you for injury or damage to their vehicle or property.
2. Third party, fire and theft: Covers your business if one of your fleet vehicles is damaged by fire or stolen, as well as claims for injury or damage.
3. Comprehensive: Covers your business if a vehicle in your fleet is stolen, accidentally damaged, or damaged by fire, as well as damage to other people’s property or bodily injury.
Most insurers also offer vehicle breakdown cover as an add-on. When applying for fleet insurance, you will be asked common questions such as the number and types of vehicles your company owns, age of the vehicles, frequency of use, vehicle condition, where they are kept overnight, and whether they have anti-theft devices installed. You will also need to decide between a named driver or any driver policy, with named driver policies being more affordable for smaller businesses and any driver policies being more suitable for larger businesses with interchangeable cars.
For employees who use their own vehicles for business purposes, it is important to have business car insurance rather than just “social” or “social and commuting” insurance. Business use insurance covers various activities such as visiting customers, driving between offices and locations, traveling to meetings, running errands, ferrying clients, and driving colleagues.
There are three types of business car insurance:
1. Class 1: Basic coverage for occasional visits to head office or clients.
2. Class 2: Includes named co-workers to share driving on work trips.
3. Class 3: Aimed at salespeople who spend a lot of time on the road and consider their vehicle an extension of their office.
To save money on company car insurance, you can choose a car in a lower insurance group with low emissions, park the car overnight off-road in a locked garage, and install security features such as alarms, immobilizers, and tracking systems.
In the case of employees using their own cars for business with a fixed mileage allowance, these vehicles are referred to as gray fleet vehicles. It is the employee’s responsibility to insure the vehicle, but the company should ensure that correct company car insurance is in place. Fixed mileage allowance payments should be made to employees, with the appropriate rates set by HMRC.
If your company carries passengers or goods, commercial insurance may be more suitable than the three classes of business insurance mentioned earlier. However, different rules may apply if an employee has a criminal record or if they are a new driver. In both cases, insurance companies may charge higher premiums or have restrictions, but it is still possible to access fleet company car insurance.
When it comes to company cars, benefit in kind (BIK) tax may apply to employees who receive additional perks on top of their salary. The amount of tax depends on various factors related to the vehicle such as its price, fuel consumption, CO2 emissions, and the employee’s income.
Finally, there are several reputable fleet insurance brands to consider, including Admiral, Aviva, and NFU Mutual, each offering comprehensive coverage and additional benefits such as breakdown cover, legal services, and more.
In summary, arranging fleet insurance for your company cars can simplify the process and reduce administrative tasks. It is important to consider the specific needs of your business and employees when choosing the right level of coverage and additional features. Working with reputable insurance brands can provide peace of mind and ensure that your company and employees are well-protected.