Is Your Business Going Electric?
As the UK moves towards a carbon neutral economy within the next 30 years, the government continues it’s promotion of electric vehicles. One of the ways it is doing this is by increasing the tax incentives for business users, with corporation tax benefits for the company and also by reducing the benefit in kind payments by employees.
In view of this, we are already seeing a big increase in company directors changing their Range Rover for a Tesla and adding it to their business insurances. Given the new incentives to employees from April 2020, we are also expecting to see a big increase in the numbers of companies purchasing or leasing these types of vehicles for employees.
So given that there is going to be a large increase in electric vehicles, what are the insurance implications to be aware of for a business?
Going back a few years, many insurers were unwilling to provide cover for electric cars as they had little experience of repairing them and considered a total loss following an incident to be a likely outcome. However, with the increase in numbers and more repairers being available, there are far more insurers who can now provide cover.
That being said most insurers will still require a premium over a like-for-like non-electric car, due to the increased repair costs and the unknown consequences of accidents in respect of batteries etc.
In addition to this, most electric cars cost more to replace and so far the theft-attractiveness of them is unknown. As a general rule we are also seeing more insurers imposing a tracker requirement for vehicles over £50,000 in value, so it is likely this will be a requirement for many electric cars on the market at the moment.
We are also seeing insurers being more strict regarding who they will allow to drive these vehicles, particularly for the premium vehicles such as Tesla, Jaguar, Audi etc. You can therefore expect to have to name drivers and possibly have an age restriction on them of over 25 or 30.
So whilst there are savings for the company and the individual, there may be some additional costs to take into consideration when deciding whether to go down this route. We would therefore recommend consulting your insurance broker in addition to your accountants before you make a final decision.