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Business car insurance; do you insure your car on business or private?

Apr 09, 2018
3 min reading time

Insurers make a clear distinction between company car insurance and private insurance. This is because business cars are used more intensively and often several people drive them. How will you insure your car? Company car insurance or private car insurance?

You usually do not use a car only for business or only privately. Still, the distinction is important for insurance purposes. Using a private car to deliver meals, for example, will not make the car's insurer happy. Problems can arise in the event of an accident. Even if the private car was only used once for delivery. The insurer will suspect that the car is mainly used for business purposes. In fact, on average, business car insurance is more expensive than private car insurance.

When do you insure your car privately?

Do you use the car mainly privately and for commuting? In that case, private car insurance is the most logical choice. You do not always have a choice. You insure a company van on a company car insurance. The term company car insurance often refers to a van, but it can also refer to a passenger car. It is a company car if the vehicle is reflected in your company's accounts.

What does company car insurance premium depend on?

Compared to a private car, company cars are often used more intensively. They are driven more miles and often in congested regions, for example, always in the inner city. The premium depends on several factors. Important ones include:

  • The type of vehicle. Is it a passenger car, a van or a van?
  • What is the maximum number of people the vehicle will be used by?
  • The daily value of the car
  • The risk of the industry in which they work. A cab or courier company pay a higher premium than average

Does company car insurance also provide coverage for private use?

Only 500 kilometers may be driven privately with a business car. More kilometers can have tax consequences, but for business car insurance, this distinction is not made. Even when driving the car privately, the insurer provides coverage against damages. You should not confuse the requirements of the Internal Revenue Service with requirements imposed by insurers.

Company car insurance premium is deductible from profits

The insurance premium falls under business expenses. You can therefore deduct it from your profit. The premium does not include VAT, but insurance tax. The rate is also 21%, but it has nothing to do with VAT. When buying the company car, however, you can gain tax advantages by offsetting the VAT and the BPM included in the purchase price.

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