Company Car Insurance

Company car insurance has both advantages and disadvantages. The company can own several cars, and take insurance on them. But from insurance company's perspective, it means many employees driving these vehicles, and consequently employees not really bothering with maintenance of the vehicles. This makes such vehicles more susceptible to meet with accidents. This disadvantage may be offset against the advantage of covering a fleet of vehicles owned by the company. Therefore, the company may be able to beat down the insurance costs for company cars if the business that it is offering to the insurance company is reasonably large.

The company can also employ somebody for regular maintenance of the fleet, or give a contract for maintenance of all vehicles owned by the company. This certainly helps in bringing down the insurance costs because the company would've employed professionals for this purpose. The company would also be able to profitably combine its security arrangements for keeping these vehicles when they are at its premises. This security arrangement is invariably better than the security arrangement that an individual owner might manage. But company car is used by employees, and retained in their homes. There can be risks, as it is difficult for the insurance company to verify each day which employee is taking the vehicle, and whether security arrangements at their place are good enough. Therefore, insurance company is likely to discount the additional security available for company cars.

There are tax benefits associated with such insurance. When a company purchases a large fleet of cars for its employees, it invariably borrows some monies from banks or the vehicle seller. The interest component on such borrowings can be set off against the year's profits. Likewise, the company can also set off depreciation on the vehicles, effectively bringing down the profits, and consequently the taxes. Company car insurance costs can also be set off against the profits of the year, reducing the tax for the company. When a company purchases insurance for the company's car, all the products of the company that are being transported in the vehicle come under the cover. The other advantage is that even the employee is reasonably compensated should any mishap occur, without the company having to pay anything from its pockets.

In so far as rental car insurance is concerned, the car rental company buys insurances for all its vehicles through some insurance company. Relevant expenses may even be passed on to the customers through the rental charges, bringing the insurance costs to a zero for the company. However, the company may still insist that the customer buy car rental insurance. This helps in keeping the insurance claims low, and gets a no claim discount for company in the following year. Usually car rental businesses have their own maintenance workshops, and other equipment for towing vehicles etc. The security arrangements are also better because there is too much at stake for the company. These two factors helps in getting a good bargain while negotiating rental car insurance rates for the entire fleet.