Posted by Mileage is an agreed amount an employer agrees to reimburse his employees for using their personal vehicles to run company or work-related activities. Recently, a survey proved that about 42% of people are not sure if it is necessary to have business car insurance to claim mileage. So, just like many others, you might be asking yourself “Do I need business car insurance to claim mileage?”
Of course yes, you need business car insurance to be able to claim mileage. Even if it is your personal car, you are now using it to run business-related activities and that’s enough reason to get business car insurance which will enable you to effortlessly claim mileage regardless of your employer’s requirements.
In this article, you’ll get to know why you need business car insurance to claim mileage, and the risk of not having business car insurance whether or not you need it for mileage claims or not.
Let’s get started!
Table of Contents
Do I Need Business Car Insurance To Claim Mileage?
Yes, you may need business car insurance to be able to claim mileage from most employers especially if you’ll be using your vehicle for frequent commercial activities and will be carrying company goods and properties.
Some other employers may not demand business car insurance as a mandatory requirement for you to claim mileage. So in a nutshell, mileage claims may be with or without business car insurance. It all depends on your employer or company policy for mileage claims.
However, the fact that you’re demanding a reimbursement from your employer for vehicle expenses while running company errands, means you use your vehicle for business purposes which makes business car insurance a necessity.
Business coverage may or may not be compulsory for mileage claims depending on your company or employer but business car insurance is mandatory by law if you use your car for commercial or work-related activities.
You need to know that regardless of the policy your company runs as it regards mileage claims, you need business coverage to use your car for work purposes else you may face some legal consequences.
What Do You Think Will Happen if a Stolen Car is Found After Insurance Payment? From this great guide.
6 Reasons Why You Must Not Ignire Business Car Insurance While Claiming Mileage
Here are a few reasons why you must not ignore business car insurance even if you’re just claiming mileage:
- It is a legal requirement in most countries
- It protects you from financial loss
- To be able to claim mileage from most employers
- You enjoy Peace of mind
- To Protect Company goods and properties
- You may enjoy Tax benefits
#1. It is a Legal Requirement in Most Countries:
Whether your employer makes business car insurance compulsory or not, it is mandatory in most countries to have business car insurance if you use your vehicle for any form of business-related tasks such as travel from one client to another, deliveries, or business conferences.
Regions such as the UK have a mandatory legal rule that you must ensure you have business car insurance because when caught uninsured after an accident one could face heavy legal penalties.
#2. It Protects You From Financial Loss:
Mileage may not be all you need to secure when it comes to your pocket while performing commercial duties with your car. You are exposed to a lot of other risks such as accidents, property damage, or injury to yourself and others while carrying out your business duties and all these unforeseen events could have serious financial implications.
Having business car insurance is the only way out of the financial burdens that come from these kinds of unfortunate mishaps. In case you experience an accident, sustain injuries, or harm others during work business car insurance foots the bills related to any of the damages saving you the unexpected financial calamity.
#3. You Need Business Car Insurance to be Able to Claim Mileage From Most Employers:
Many employers may not want to reimburse you for the miles you have covered with your car during work hours until you present a prove of having business car insurance because it proves that you actually use that vehicle for business-related tasks not just for personal use.
Making it easier to believe that you may have incurred certain expenses during work hours while using your car to perform your duties. Most importantly, it protects the company goods and properties in your vehicle from potential damage that the company may not be prepared to cover for you.
#4. You enjoy Peace of mind:
While mileage may cover the cost of the many kilometers covered during business-related duties and expenses such as gas consumption, it does not at all guarantee you any form of protection against accidents, or any form of liability you may cause others but when you have business car insurance you’re confident and less bothered about uncertain events that may be ahead because you have a backup plan.
#5. To Protect Company Goods and Properties:
Mileage only reimburses you for using your car for business errands but does not guarantee the safety of the goods in it. In case you lose or damage any company property or goods in your vehicle you’d be held responsible for such losses and will have to pay for them in full.
You don’t want that right? So what next rush and grab a business car insurance coverage?
#6. You May Enjoy Tax benefits:
Sometimes the money you spend on business car insurance is deducted from your tax giving you the advantage of paying less for taxes. Won’t you like to enjoy that even while you claim mileage?
See this: Do You Need Insurance To Register A Car In Florida?
Consequences Of Not Having Business Car Insurance While Using Your Car For Cisoness Purposes
Securing mileage without business car insurance could cause potential consequences such as:
- Facing Legal Penalties:
- Incurring Huge Financial Losses:
- Your Personal Car Coverage May Be Rendered Null and Void:
- Your Company May Lose Its Reputation:
1. Facing Legal Penalties:
You may be able to claim mileage from your employer without business coverage but in states where business car insurance is mandatory like the UK, once you’re caught using your vehicle for business without the proper insurance you would be facing serious legal consequences such as hefty fines, vehicle impoundment, and license suspension.
Your case might be sadly worse when the law catches up with you when Involved in any form of accident that causes damages or injury to yourself and others so to avoid the unnecessary legal headache we’d advise you to get one.
2. Incurring Huge Financial Losses:
Mileage may just be a small financial plus compared to the hefty financial losses you will be responsible for when an accident happens. Such unforeseen events come with serious injuries and damages first to yourself and worst still, to others.
If this happens while you are running business errands you will be solely responsible for medical expenses both for yourself and other injured persons at the scene, your car repairs, and other people’s repairs too.
The case might even be more frustrating If there are goods that are damaged in the process which you will have to pay for. Nobody wants to find themselves in such financial frustration and we definitely do not want that for either so business car insurance is a wise investment.
3. Your Personal Car Coverage May Be Rendered Null and Void:
If you’re using your car for work without informing your car insurance company and you incur damages you might be denied any form of coverage at all because the car is seen as a business car, not a personal car. There will be an exception only if the damage happens when you’re commuting to work.
4. Your Company May Lose Its Reputation:
The reputation of your business or company may be at stake when you’re involved in an accident that causes others injury and damages without proper insurance.
Read This: Driving To Work Without Commuting Insurance.
Different Types of Insurance Policies to Consider While Claiming Mileage.
There are different types of insurance policies available for mileage claims depending on the reason for the claim, and they include:
- Business Car insurance
- Commercial Auto Insurance
- Personal Auto Insurance with Business Coverage, and
- Employer Mileage Reimbursement Programs
#1. Business Car insurance:
This type of insurance offers you coverage when your car encounters accidents that may cause your car and others who may be involved in the accident.
Usually, business car insurance policies demand a comprehensive record of the miles covered during business activities because that may determine your premium to an extent.
2. Commercial Auto Insurance:
Just like business car insurance this type of insurance offers protection to vehicles Frequently used for commercial activities such as deliveries, picking up clients, and carrying goods to and from the company.
These vehicles are constantly on the run and are prone to so many risks. So this policy offers coverage for all the expenses you may encounter during such commercial movements.
You can get your commercial auto insurance from these reputable insurers:
3. Personal Auto Insurance with Business Coverage:
This type of coverage is important if you already have personal car insurance but you use your personal car for occasional business errands.
We advise you to inform your personal car insurance company if you use your car for business once in a while, an additional business coverage advantage might be added to your personal car coverage enabling you to stay protected from liabilities In case any form of disaster strikes during any of those occasional business events.
4. Employer Mileage Reimbursement Programs:
Some employers offer to foot the bills for expenses incurred while using your vehicle for the business. They reimburse you for the amount of gas spent on the total calculated miles run.
Most times the IRS system is used to calculate the number of miles run or they may have a fixed mileage rate which you have to agree on. Also, you may be reimbursed for wear and tear due to constant use for business.
Read Also: Driving Without Insurance in Quebec
2 Proven Ways You Can Claim Mileage From Your Employer
Here are two available ways of claiming Mileage from your employer or company with or without your business car insurance:
-
Standard Mileage Rate:
The Internal Revenue Service has a set official rate per mile which vehicle owners can use to measure mileage logs. It is the easiest way to claim mileage from an employer.
-
Actual Expense Method:
Here you are required to keep up-to-date records of all the expenses you made throughout the year while using your vehicle for business-related activities such as car repairs, gas, and insurance. This might require some effort from you but will pay out of your expenses exceed the Standard Mileage Rate.
Factors You Must Consider Before Getting Business Car Insurance While Claiming Mileage
The following are some of the factors you must bear in mind before opting for business car insurance:
#1. Check if Business Car Insurance is a Requirement Before the Claim
You have to review your company’s policy and be aware that business car insurance is a must-have before you are allowed to claim mileage or not. If it is a must in your company, then you must have it.
#2. Consider How Often You Will Use Your Vehicle for Commercial Purposes:
While a mileage claim is a good payout for those who are constantly on the road for commercial activities such as deliveries and picking up clients then you must secure a business coverage because you’re more exposed to the risk of accidents and other unforeseen events which may cost you heavier liabilities than the payout you may get from mileage claims.
#3. How Much Risk Can You Take?
Your level of risk tolerance is what considering you will be able to take responsibility for the liabilities you may incur after an accident then you can ignore business car insurance if you choose to but bear in mind that even the slightest injuries can be very expensive remediate.
How To Choose The Right Business Car Insurance Coverage At An Affordable Price
Follow these steps to choose the right and affordable coverage:
- Understand What You May be Using Your Vehicle:
- Do your Shopping
- Consult a Licenced Agent
- Find out if Discounts Apply:
1. Understand What You May be Using Your Vehicle:
Being aware of the kind of activities you’d be using your vehicle for will help you understand the potential risk you could encounter and that will inform the kind of coverage you go for. As a delivery agent, you should know you will need commercial coverage because you’re constantly in the roadbed business.
2. Do your Shopping:
You can’t just grab the first quote you come across. Compare prices from different insurance companies and note the ones that meet your needs at the most affordable price.
Look out for how much deductibles are required. Get customer testimonials they’ll help you know how reliable the insurance company can be.
3. Consult a Licenced Agent:
Seek the counsel of an authorized agent on which business coverage plan will be best suited for your needs. They will be able to offer trustworthy assistance as to the best plans that will meet your needs.
4. Find out if Discounts Apply:
You can ask questions to know if you can be offered discounts, especially in cases where you combine different coverage plans. Many companies offer discounts in such cases.
Frequently Asked Questions
Yes, some employers demand business car insurance before you can claim mileage. Other employers do not make it mandatory before reimbursing you for mileage expenses. However, if you use your vehicle for business purposes you are advised to secure business car insurance coverage regardless of your employer's requirements.
The benefits of having business car insurance even if it is not required for mileage claims include financial protection, freedom from legal penalties, peace of mind, and protection of company goods and properties in your vehicle.
Of course yes, you can claim mileage deductions on your tax without business car insurance if your employer does not demand it. But you have to keep an accurate record of the miles covered during business activities.
You can know the right coverage to choose by understanding what you likely use the vehicle for. If you are in charge of deliveries you will sure need commercial coverage because it offers coverage for people who will mostly use their vehicles for commercial purposes. It is mandatory to have business car insurance to claim mileage?
What are the benefits of having business car insurance even if it's not required for mileage claims?
Can I claim mileage deductions on my tax return if I use my personal car for business and don't have business car insurance?
How do I know the right coverage for my vehicle?
Important Recommendation
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Conclusion
Now that you’re aware that you can claim mileage with or without business car insurance depending on your employer’s requirements you should bear in mind that mileage claims are not all there is to secure while using your car for business.
You must protect your finances, your company’s reputation, and yourself from legal penalties too.
We really hope this article helped you understand all that concerns business car insurance and how it affects mileage claims. Let us know if you still need further clarifications, we’d be glad to help.
We are looking forward to your visit again as regards your insurance matters. We’re always here for you.