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  • #986416
    iammrwong
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    We’ve decided to buy a new car under my company’s name. My wife and I are the directors of this company.

    When we called around for comprehensive insurance however, the price varies greatly between a private policy and a business policy (private policy is much cheaper).

    From a tax/legal perspective does it matter if the car is under the company name but the policy is under my name?

    #1157668
    MissSassy
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    Hopefully one of the insurance pro’s will reply but if you have a business registered vehicle then you have to have business insurance as far as I know. One must match the other.

    #1157669
    Dave Gillen – Former FS Concierge
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    Welcome to the Forums!

    It sounds like you’re looking to get the benefits of company ownership AND the benefits of private ownership.;)

    If it were me, I wouldn’t want the tax office to be confused and start digging further into the issue. But I’m no expert, so hopefully someone qualified will be able to give you a straight answer.

    Thanks for joining us! :)

    Dave

    #1157670
    alliedib
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    iammrwong, post: 181837 wrote:
    From a tax/legal perspective does it matter if the car is under the company name but the policy is under my name?

    Hi iammrwong,

    Perhaps the tax office may not care how you insure the car – to be on the safe side I would discuss this with your accountant.

    From an insurance perspective, you certainly want to ensure they you get the right cover. There is no point saving a few $ up front only to have a claim declined because up the vehicle is insured incorrectly. My thoughts are that there are two issues:
    1) Insured Name – usually you are required to insure a vehicle in the name of its registered owner ie your Pty Ltd. There may be some exceptions, but this is usually in regards to 3rd parties hiring vehicles and assuming responsibility to insure them (this isn’t happening in the scenario you describe); and

    2) Insured use – the questions asked by insurers may be different. Some insurers will ask ‘how is the vehicle registered to be used?’. If the vehicle is registered in a Pty Ltd, then the answer has to be ‘Business’.
    On the other hand, some insurers will ask ‘how will the vehicle be used?’ – the answer being Business or Private (if both then select Business). Some insurers will also have an ‘Executive’ use classification for Pty Ltds used only for Private Use.

    My suggestion – make sure you read the insurers questions carefully and check the policy wording to ensure you understand the insurers definitions. Don’t assume that each insurer is the same because definitions vary between insurers (in fact some insurers have more than one policy wording with different defintitions – depending on their distribution channels). Otherwise you can always talk to an insurance broker – tell them your scenario and they may be able to suggest a suitable policy for your needs.

    If you need me to clarify anything please let me know.

    regards,

    Mark

    #1157671
    iammrwong
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    Thanks for information guys. Sounds like I should probably insure it under the company name.

    PS. This was actually my first post in the FS forums and I’m amazed at the depth of knowledge in this community!

    #1157672
    alliedib
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    iammrwong, post: 181883 wrote:
    Sounds like I should probably insure it under the company name.

    Check with the insurer you are going to use but it may be the best way to go.

    As mentioned earlier, if you are only going to use for Private / Social / Executive use some insurers may allow you to insure this way – make sure you check with them as to what their guidelines are.

    Depending on your business, there may be some instances where it is better to cover as Business use (irrespective of whether you are using for business or private). If you are in sales or consulting for example, you may sometimes use your vehicle to see clients and this would be considered Business use – you don’t want to have the issue of insuring your car privately, only to have to make a claim whilst you were undertaking business activities.

    Regards,

    Mark

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