I happen to be in Ontario, Canada but am curious about laws anywhere in north america regarding a corporation owning and insuring a car. Basically I work for my fam’s real estate business and need a new car (mostly for work). Because I’m relitively young all the quotes I’m getting are insane (ie. 400-600 % more than monthly car payments would be!). So I got to wondering whether it would it be legal and practical to have the corporation buy/insure the car? Would every person who is allowed to drive the car have to be listed on the policy?
I happen to be in Ontario, Canada but am curious about laws anywhere in north america regarding a corporation owning and insuring a car. Basically I work for my fam’s real estate business and need a new car (mostly for work). Because I’m relitively young all the quotes I’m getting are insane (ie. 400-600 % more than monthly car payments would be!). So I got to wondering whether it would it be legal and practical to have the corporation buy/insure the car? Would every person who is allowed to drive the car have to be listed on the policy?
Check with your local insurer, etc.
Yes, a vehicle OWNED by a corporation can be insured under the name of the corporation. Which is nice, because the owner of the car is duly protected.
In determining the premium for the vehicle(s) in question, the insurance company will require a list of all drivers of the vehicle(s) and will set the premium so that the highest-risk drivers will be rated first. Meaning, if here is one 19 year-old male driver and 4 38 year olds, one car (usually the most expensive one) will show a 19 year old male operator as the principle driver. The reason they do this is because if there is a chance that the young man can operate the most expensive car in the fleet, then there is the risk of that car being wrecked by a young man. The premium has to be collected to cover that risk.
So yes to your question. But it won’t do what you want it to. Get candid witha local insurance agent for specifics. The clock is your only friend for now, I think.
Thanks Inigo! I’ll definitely investigate further now that I know there is a possibility of getting a good deal. My logic is that the quotes I’ve gotten online for ‘shared policies’ tend to be lower than when its just me, now the problem is that I can’t get a shared policy if i’m living @ home w/ 2 parents who each have their own car, that is to say that I am required to be a primary driver on 1 of the household cars. But if I can setup this corporate deal (esp. if I keep my existing vehicle too) then perhaps I can save a few bucks.
My mom used to work for Toyota and employees are allowed to lease cars from them much cheaper than the market price, with the insurance included. Not sure exactly how it worked, but my mom was able to lease me a brand new Corolla and my name was on the lease but technically the Toyota corporation owned the vehicle, and I was insured through whatever insurance company Toyota used. My mom paid a lump sum of I think around $280 which included the cost of leasing the car, full coverage insurance, and free auto repairs and maintenance.
I don’t have the contract in front of me but I’d be willing to bet the Toyota insurance:
covered only the car against damage; to protect Toyota’s car
cost more for this physical damage coverage than you’d have paid under a regular insurance policy–and would have been waived in the presence of the same.
Hi OPAL!
provided no coverage to the driver for liability (in case the driver killed someone and got sued) the way a normal car insurance policy does.
If the Toyota insurance was presented to your mom as being what you’d normally think of when you think of car insurance, then I’d bet even more money that the policy was accidentally or intentionally misrepresented.
What is the case where a company has a fleet of cars which are all driven by whoever needs to run an errand or make a delivery? Does every single employee have to be listed on the policy? What is the employee’s liability in case of an accident?
A-yup. And ifa driver develops an unsatisfactory driving record The Company will be given the choice of sacrificing the policy or agreeing to exclude that driver from coverage. In jobs requiring driving, this may equate to termination of employment.
Same as in any other accident. Generally if the employee is driving on company business then the company’s insurance will apply as primary coverage for any damages arising out of an accident.
If it gets messy (bunch of people killed or worse) then litigation will look to The Company as well as to The Driver. If the damages exceed The Company’s liability limits then The Driver’s insurance may or may not kick in–depends on how their insurance company treats these kinds of losses. Many exclude them from coverage.
Uh, my company has thousands and thousands of employees of all ages an driving records. I have to imagine that we’re self-insured for liability, then, because I can’t imagine the headaches that would result from trying to keep track of all of this information.
I posted under another iteration of this thread, too. If Toyota is like Ford or GM, then the employee lease (usually management level, not necessarily management) is totally and completely inclusive, including all insurance and maintenance. It’s part of the benefit of being management level.
That’s completely possible. Corporate Risk Management doesn’t always have to involve insurance companies, simply proving to the state that you’re solvent for the minimum liability limits is pretty much sufficient.
Makes some sense, the company doesn’t have to give the insurance premiums away and can use that capital in other parts of their operation. Of course, in the unlikely event of a catastrauphic loss then they have to cough up the cash, but really bad accidents are pretty rare and so many larger corporations choose to accept that risk. It’s all a matter of pucker factor.
A company can insure their own (business) cars AND they can insure (as a hired non-owned umbrella liability policy) cars that are used by the employees who own them while they are on company time. But the issue is this:
Employees still must have basic liability (15K/30K) and property damage insurance on their cars.
Some insurance com require higher amounts…in California, virtually all insurance companies boosted the employee’s minimum liability amount to 100k/300k with 50k property damage. These policies must be in place and current for the umbrella liability policy to kick in after the 100/300/50 have been exhausted. The umbrella liability insurance is usually 1 mil/3 mil total, or in multiples thereof.
Many insurance companies will have issues with any employee between the ages of 18-25 who is considered hiring…usually a separate MVR record is obtained to verify that it is an umblemished record in order to insure (and be able to work!). If not, they are uninsurable and chances are, not employable.
Bottom line…you still have to insure yourself, because you cannot claim that insurance paid by the company will be in force for all hours of every day of the year. The insurance company will definitely see through that.
I also think that the car companies have a different insurance plan where they pay to insure the car (regardless of who drives it) versus most other policies where the driver is insured (regardless of what care they drive). Not sure though how available that insurance is for the rest of us, and non-car dealership businesses.
Try to have your business pay part of the cost of the insurance or reimburse the miles you have driven. Here in the U.S., the current IRS approved mileage reimbursement rate is 40.5 cents per mile. This mileage reimbursement is not taxed if you keep a detailed log of your driving on company time. Ask your company if you can be paid that way. (If Canada has something similar to this.)
Speaking as someone who held a RIBO license and practised insurance in Ontario: Yes, it’s legal. The company can buy and insure a vehicle. You, however, as the principle operator, must be listed as such. There’s really no way around paying higher rates because you’re young.
If you live with your parents and there are more drivers than vehicles, you can be listed as an occasional operator on the most expensive vehicle to insure. This can be listed as a personal vehicle in the following example: Dad’s the P.O. on the 1999 Car, Mom’s the P.O. on the 2005 Car, and you’re listed as an “06” or occasional driver on the 2005 Car. This means a rate increase on the collision and liability portions of the insurance.
If you don’t live with them and/or want coverage on your own, you will be charged as the principle operator and pay accordingly. Listing someone else as the driver, yet you being the principle operator, is considered fraud in the event of an accident, and the insurance company can refuse to pay.
You’d be lucky to get on with the same company your parents are insured with, so that they’re ‘supporting business’. Contact their broker.