How much is depreciation in commercial motor insurance?

The value of a company car decreases with increasing use and age. This depreciation is called depreciation. How do you calculate and deal with depreciation?

Buying a car for business purposes gives tax advantages. You can put the car on the balance sheet and so the tax authorities also pay for the company car. For the company car insurance, the value of the car is an important factor in case of a claim on the company car insurance. The current value is the new value of the car minus depreciation.

What is the depreciation on a company car?

When talking about depreciation for company car insurance, it often refers to fiscal depreciation according to the tax authorities. A company car is considered an asset. The amount of depreciation is determined in the same way as the amount of depreciation on, for example, a machine in business premises. Three values are important in determining the amount of depreciation, namely:

• The purchase cost - The amount the vehicle was bought for. It can also be a second-hand car purchased.
• Residual value of the company car - This is the amount you are likely to receive for the company car when sold.
• How long will you use the car? - How long will the car last? The company car will be written off over a period of at least 5 years.

You calculate the depreciation by deducting the residual value from the purchase price. You then divide the result by the expected useful life. You can enter the depreciation in the administration.

The depreciation according to the commercial vehicle insurance

In case of a claim on the company car insurance, the daily value and thus the depreciation are also considered. The value of the company car on the balance sheet does not have to correspond to the current market value that is assumed in case of damage. In case of damage, an expert engaged by the insurer can determine the current market value. If the damage amount exceeds the current market value, there is a total loss. The company car insurance pays out a maximum of the current market value.

Do not forget the accessories

Are there accessories on the company car that were not standard on the car when it came from the factory? You must list these accessories when comparing commercial vehicle insurance at Alpina.nl. By not including accessories in the insurance policy, a payout will not include the additions. Also, a commercial vehicle is more likely to be declared totaled, because the accessories do not count when determining the daily value.