Company cars can be a great perk, but getting cover can be very expensive. Here are some practical tips to keep your car insurance premiums down.
With around a million company cars in the UK, ranging from bikes, cars and vans, it can be a fantastic benefit in kind (BIK) for the employees of your organisation. Some staff members will appreciate a company car as a real work incentive and not having to worry about the tax, insurance and cost of fuel.
For companies, you may provide cars to your staff as a perk but also as an essential way to make deliveries, visit different sites and go to meetings. Especially in the construction or delivery business, having branded vehicles is huge for publicity and brand awareness. However, being responsible for so many company cars comes at a price and there are some smart ways to reduce the cost of your insurance.
Leveraging young drivers
Insurance premiums are largely based on the risk of your vehicles having an accident and making a claim. By having young drivers on your policy under 25 years of age, the cost of your insurance instantly goes up as those with less experience behind the wheel are statistically more likely to be involved in an accident. By comparison, the price of a policy is significantly less for more experienced drivers aged 40 to 60.
To overcome the issue of young drivers, companies can pay for additional driving courses such as Pass Plus which costs just a few hundred pounds and takes six hours to complete. The advanced course is acknowledged by all insurers and can reduce premiums by 20%.
Companies can also avoid putting young people as the main drivers of a vehicle. If a young person shares their company car with other members of staff, it is advised that companies use the more experienced person as the main driver, because insurers consider that they do more of the driving. The information about the main driver has to be accurate otherwise it is illegal to use this method to get a discount, known as fronting.
Although a young person is classified as being under 25 years old, if they have been driving for a few years and have avoided making a claim, they can use a no claims bonus. This provides a discount on your insurance premium year-upon-year as a reward for safe driving.
Purchase a fleet policy
If you have numerous company cars, you can save a lot of money by putting them all under the same policy. The insurer will be happy for the business so willing to give you a discount for purchasing the cover in bulk. This is known as fleets insurance and allows companies to save time on the administration, payments and renewals dates by having everything under one account.
Employees pay their own excess
Although having a company car implies that the employer will cover the cost of the insurance, you can always make the driver responsible for paying their own excess.
The excess is an amount of money that is agreed between the driver and the insurer and is only paid when they wish to make a claim.
It is made up of a compulsory excess which you have to pay, e.g. £200. The rest is a voluntary excess which you choose and the more you agree to pay, the lower your premium will be. It is the insurance company’s way of saying ‘thank you’ for agreeing to pay more if there is an accident.
The employer can set a high voluntary excess if they wish and it puts the responsibility on the member of staff to be a safer driver – because they will be out of pocket if they get into an accident. If they are safer and avoid making a claim for a long period of time, this will allow the employer to gain even greater discounts through the no claims bonus.
Using telematics and GPS
Another factor that contributes to the cost of an insurance policy is the amount of mileage that is done. For some couriers or long-haul delivery companies, the mileage can be enormous and lead to a very expensive policy.
The mileage is usually given to the insurer based on estimates and calculations, rather than the exact number of miles done. By adding a telematics box, which is the size of a smartphone, to each vehicle’s dashboard, the company and their insurer is able to track the exact number of miles they do and also review their speeds, acceleration and braking.
So if it turns out that the drivers are very responsible and do less mileage than expected, the company can receive a big discount.