The rules for company car insurance can be a little tricky to understand. The cover you need will depend on whether you’re driving a car as part of a company fleet, or if you’re using your own car for business purposes.
In this post we’ll look at the key company car insurance rules, so you can assess what sort of cover you’ll need for your business and your drivers.
If you have any questions about any aspect of your insurance responsibilities, we’re here to help. Talk to our friendly risk management experts by calling us on 020 8290 9099. Alternatively, you can email us at commercial.motor@anthonyjones.com.
Who’s Responsible For Insuring Company Cars?
Employers are responsible for ensuring that all the drivers and cars in their fleet have adequate insurance coverage. So in most cases, company cars are insured by whichever company owns them – usually as part of a fleet insurance policy.
Usually, when we talk about “company car insurance”, we’re referring to fleet insurance. Your employer will buy the car for the company, and let you drive it as a named driver on their fleet insurance policy.
Who’s Responsible for Keeping Company Cars Taxed, Serviced and MOT?
As well as taking responsibility for insuring the company car, they’re also responsible for ensuring the car’s taxed, serviced, and maintained, and that it passes its annual MOT. You may also get reimbursed for fuel and other travel expenses.
So in most cases, if you drive a company car, then you don’t need to worry about insurance. That’s your employer’s job. Unless you’re a business owner, of course. Then you will have to arrange your own cover for any car you drive for business purposes. It comes with the “be your own boss” territory.
Please note though, that a company car insurance policy will only ever cover you to drive one car. It will not cover you to drive any other vehicles. So if you ever want to drive someone else’s car – or if you ever want anyone else to drive your car – you’ll need to take out some temporary car insurance.
But there are some exceptions to this rule. And this is where things can get messy.
Who is Responsible for Insuring Grey Fleets?
It’s common for employers to use their own cars for business use. From an insurance perspective, this can create some complications:
- If the employer covers all of an employee’s mileage (as part of a fixed mileage allowance), then the employer’s car becomes what’s known as a “grey fleet vehicle”. This means that, while the employee is responsible for insuring the vehicle, the employer has a duty of care to make sure the employee has the right level of cover in place. You can learn more about an employer’s responsibilities when it comes to grey fleet vehicles.
- If the employee owns their own car which they occasionally drive for business purposes, then their car insurance policy may not give them the level of cover they need. While they may not need a dedicated company car insurance policy, they will have to ensure their policy covers them for business use.
Different Types of Business Car Insurance
If you need to insure your own car for business use, then you need to determine what sort of business journeys you’ll be making. This will determine what sort of business car insurance policy you need:
- Class 1 – This will cover you for the occasional business trip, such as a client visit. It will not cover you for extensive business miles – such as if you spend entire days on the road visiting one client after another.
- Class 2 – These business car insurance policies include named drivers. They allow for multiple employees to drive the same car with the same level of cover. They’re therefore a popular choice for small businesses with relatively small fleets.
- Class 3 – These policies cover extensive business use, for those drivers who spend day after day on the road, visiting numerous clients a week. Class 3 policies tend to cost more than Class 1 or Class 2 policies, to account for the extensive mileage.
If you’re just using your car to commute to and from the office, then you may not need dedicated business car insurance. However, you may need to specify that you’re using your car for commuting. This way, your insurer will cover you for SDP+C use (social, domestic, pleasure, and commuting). If you don’t tell your insurer that you use your car for a daily commute, they may refuse to cover you if you’re ever involved in an accident on the way to or from work.
Got Any Questions About Company Car Insurance?
Company cars. Business use. Commercial use. Grey fleets. We get it. It’s all a bit complicated, isn’t it?
But we’re here to help. Whether you’re a business owner or fleet manager looking to get good cover for your fleet, or you’re a private driver wondering about using your car for business use, we can advise you on your situation and help you get the cover you need at a competitive price.
For more information, give us a call on 020 8290 9099, or email us at commercial.motor@anthonyjones.com.
