Should business' pay for employee's business car insurance?

[Louis Porter]

A bit of a strange question I know. I found this infographic and from what I gather if an employee runs any errands for the business or travels to clients' offices then they need to have specific insurance (I've never had it). Business Insurance Infographic


With this being the case, do you think business' should pay towards their employee's car insurance?

 

[StevensOnln1]

The mileage allowance you pay the employee should be enough to cover their running costs for the business use of their car, i.e. the additional cost of adding business use to their insurance cover as well as fuel etc.

 

[Scott-Copywriter]

I don't think you need specific business insurance. They are an insurance broker, so they will obviously be biased when they're putting the concept across.

Any normal insurance policy allows you to select whether it's for personal use only, commuting to a place of work, business use, or all three. I would have thought that the addition of business use on any policy would cover this.

However, they are certainly correct in one aspect. If your insurance is only set for personal use and commuting to a single place of work, and you run any errands for your employer or visit clients, then you aren't legally covered whilst you're making those journeys.

 

[Louis Porter]

But surely measuring it would be a bit of a challenge. How do you find the balance if the employee's not regularly using their car for work?
What if they were unaware that they would be running business errands when they got their car insurance and only opted for commuting & personal use? If they were then pulled over and received a fine, should the company then have to pay for it?

 

[Newchodge]

If they run errands in their own car for the business, they should inform their insurance company of the likely frequency and length of the journeys, as soon as they know and before undertaking the journey. Some insurers will allow a moderate amount of this type of journey without insisting on formal business cover. If that is the case the employee needs to get the concession in writing.

If the insurer insists on buciness cover, then either the employee cannot do it, or they will have to get cover. If the cost of the cover is out of proportion to the mileage allowance you pay them, then the employer should cover the cost.

Under HMRC rules you can pay a mileage allowance of up to 45p per mile. If they only travel 100 miles per year, receiving £45 from you, and have to pay £100 for the cover, you are unlikely to get them to do it!

If they get done for driving without insurance they will get penalty points as well as a fine, which you can do nothing about; therefore it shouldn't happen. The business could probably also get done for aiding and abetting driving without insurance.

 

[Maxwell83]

If they get done for driving without insurance they will get penalty points as well as a fine, which you can do nothing about; therefore it shouldn't happen. The business could probably also get done for aiding and abetting driving without insurance.

You will not be prosecuted for driving without insurance - insurance is in place and no criminal liability exists at this point.

The insurance company may have the right to avoid the policy if they find out about the undeclared business use - terminating your cover and returning any premiums. (If an accident has taken place, then they have the right to avoid paying out on any claims to the insured, but it will still meet it's third party obligations and will of course sue the policy holder to recover those costs). If you were to continue to drive after the policy has been terminated, THEN you can be prosecuted for driving without insurance.

There was a case relating to all this, and the charge of driving without insurance was thrown out, even though the driver had purposefully lied about his convictions to get insurance, because the insurance company had not exercised their right to terminate the policy at the time that he was pulled over.

 

[Louis Porter]

This is all very interesting. I never knew this. Thanks guys.