Company car owners should be aware that the cost of their insurance is an important factor. Some cars have lower insurance costs than others, so if you’re looking for a cheaper policy, there are a few things to look out for. The Association of British Insurers (ABI) provides advice on the type of cars that typically have lower premiums. Generally, smaller cars made by established manufacturers — such as Ford, Volkswagen and Vauxhall — are those that tend to keep costs down. It noted that electric and hybrid cars can be more expensive to insure because the cost of replacement parts for them is higher.
Vehicle security is also a major factor. Installing an immobiliser or an alarm could help reduce premium costs. A spokesperson for the ABI advised company car drivers to “look out for cars with advanced driver assistance systems and any other features that could help reduce their risk of being involved in an accident.”
< h2> Other Insurance Considerations
Premium costs are also affected by the average annual mileage of the car, as well as its market value. Drivers who are planning to use their company car extensively should ensure that they are adequately covered. Another key factor is the amount of cover they are looking for. The ABI spokesperson said: “Company car drivers should decide whether they need comprehensive cover or third party, fire and theft.”
The type of car you choose, when combined with these other factors, will give you an indication of the likely cost of insuring your company car. It’s always worth shopping around for the best quote and be aware of any small print and exclusions when taking out an insurance policy.
< h2> Tax Considerations
Company car owners should also consider the tax implications of the car they choose. For example, the taxable benefit for electric cars is currently four per cent. In comparison, the taxable benefit for petrol and diesel cars is currently between 11 and 37 per cent. Drivers should look into the tax implications further before deciding on their car.
When it comes to business use, there are also other incentives to choose an electric car. For example, there’s no company car tax to pay on 100 per cent electric cars. The government also provides a grant of up to £3,500, which goes towards the cost of buying an eligible electric car.
< h2> Budget Limitations and Company Policy
Some company car drivers may have a limited budget to work with, as well as a company policy on the age of cars that are acceptable or a list of suppliers. Those factors will also influence their decision.
Unsurprisingly, it’s important for company car owners to conduct proper research before committing to a particular make and model. Reading through customer reviews of cars, as well as those from professional bodies, can help them reach informed decisions.
< h2> Environmental and Economic Factors
Company car drivers shouldn’t forget to take the economic and environmental performance of their car of choice into consideration. Many of today’s cars come with a range of fuel-efficient engines, though electric and hybrid cars have the potential to save drivers thousands of pounds in fuel, in addition to reducing their involvement in carbon emissions.
< h2> Cost Per Mile – A Rule of Thumb?
Cost per mile is often the way in which company car owners assess the overall running costs of their car. There a few online calculators that can help drivers calculate this themselves. On average, petrol and diesel cars cost around 12p per mile. Comparatively, the cost of running a 25kW electric car has been estimated to be around 6p for the same distance.
This estimation should however be considered with caution. Although this can act as a rule of thumb, choosing a car is always a very personal decision and there are many other factors at play.
Fuel Types and Alternatives
Company car drivers should also be aware of the different types of fuel available and that some cars use and produce electricity more effectively than others. Alternative fuels are also an option to consider, with some companies opting to switch to Biofuel. Biofuel is the most popular alternative fuel, as it emits around 85 per cent less greenhouse gas emissions than traditional petrol and diesel.
< h2> Managing Maintenance and Repair Costs
Managing maintenance and repair costs is another key factor for company car owners to consider. Automobiles are expensive but necessary purchases, and costs can add up quickly. For example, a major issue with a car can easily cost thousands of dollars to repair.
Business owners should ensure that the company cars are regularly serviced to minimise any unexpected maintenance costs. They should also consider investing in products like telematics and vehicle tracking to monitor usage and upkeep of the car.
< h2> Hire or Buy?
Whether a company should opt to hire or buy a company car should also be considered. Buying gives a driver more freedom to choose their own car, whereas hire cars generally offer better reliability and come with a full service history.
Drivers have to weigh up the pros and cons of buying versus renting, and based on their own circumstances, one may be more suitable than the other. For instance, if a company regularly uses cars and changes them regularly, hiring cars may be the more cost-efficient option.
