If you’ve been searching for relevant information on car salary sacrifice insurance, you’ve probably seen there isn’t a lot of comprehensive information out there. You might be left with several questions unanswered, such as:

  • Do you get car insurance with a car salary sacrifice scheme? 
  • Why is it more expensive than regular insurance?
  • Can an employee use their personal insurance?
  • Is the insurance fully comprehensive?

We understand that insurance can be tricky as there are many variations and subclauses to keep into account. The last thing you want as an employer or employee is to be dealing with complicated insurance claims or not knowing your responsibilities concerning the car.

This article is not financial advice. For personalised advice, talk to a financial or legal advisor. All policies, facts and figures are correct as of time of writing 28/9/22.

In this article, we'll cover:

Note: Looking for someone to seamlessly handle all the hassle involved with insurance in a car salary sacrifice scheme? Get started with loveelectric for free.

Here's what's included in loveelectric’s car insurance and maintenance package

Before we dive into the specifics, it’s worth noting that at loveelectric we specialise in providing an electric car salary sacrifice scheme. We’re licensed by the Financial Conduct Authority (FCA) and are focused on being transparent with our fees, policies and business model, so you feel you understand our process all throughout.

You can learn more about loveelectric’s story here: Electric Cars are Expensive. Here’s How We’re Democratising Electric Vehicle Access At loveelectric

So what’s included in your car insurance with us? Firstly it’s worth mentioning that it’s not mandatory to take our partner LLG’s insurance policy when signing up to the salary sacrifice car scheme. 

However, if you are to use your own insurance, it must be fleet insurance, not personal insurance. This is because the business is being insured, not the employee. To comply it must be fully comprehensive and cover all named drivers. 

Here’s what’s included in your insurance agreement with LLG:

Fully comprehensive car insurance for worry-free driving

Most salary sacrifice schemes offer fully comprehensive car insurance, but not all are created equal – we’ll cover why that is further down.

As part of your agreement with loveelectric, you’ll get a maintenance package that’s covered by the leasing company. This cover includes:

  • MOTs
  • Repairs
  • Maintenance
  • Servicing
  • Accidents
  • Breakdowns
  • Roadside assistance
  • Replacement tyres for wear and tear
  • Cap clean cover

Optionally, you can also include:

  • Gap protection

We’ve recently added gap protection. This is an added protection mechanism in case the car is written off and the insurer's valuation doesn’t match the leasing company's vehicle valuation. Having gap protection will cover the difference, so the company that has leased the car won’t be liable for having to pay this difference to the leasing company.

The quotes shown on our public website already include early termination protection, Benefit in Kind tax (BiK tax) and insurance accounted for in the price. However, the insurance figure on the public site is more of an average. You’ll get a more accurate number once your employer signs up and you’ll be able to input your salary, postcode, annual mileage and contract length.

Driver handbook and account manager so all information is easily accessible

When you sign up, we provide you with a driver's handbook and account manager. The driver handbook outlines almost everything the employee and employer will need to know about their responsibilities to the car and the insurance, so you’ll always know what to do in specific circumstances.

How salary sacrifice car Insurance works

Inside is a helpful list of contact details of who to call in any event, from MOTs to roadside assistance. 

If you are struggling to figure anything out or need more information, you’ll always be able to reach out to your appointed account manager. They’re there to help and are with you throughout the process.

5-star rated insurer to give you peace of mind

Lloyd Latchford Group are a specialist insurance broker that have a panel of 5* rated insurance companies. At loveelectric, we’re an appointed representative of LLG. 

LLG cover over 700 car fleets and have been working in the salary sacrifice car insurance industry since 2007. They’ve also partnered with two of the UK’s biggest fleet providers, Aviva Insurance and NIG insurance, so you can be sure we have everything in place to keep you secure. 

Once signed up with their fleet insurance, you will receive a copy of the insurer’s fleet management and insurance policy. It’s a helpful document that goes into more detail than the driver handbook on all the legal terms.

We offer hassle-free insurance because it can all be included in one price and, despite the higher premiums, also benefits from the same tax savings as the lease cost.

Why do salary sacrifice schemes have to use fleet insurance?

Three of the main questions we always get when it comes to motor insurance are:

  • Why does it need to be fleet insurance?
  • Can I use my own personal insurance?
  • Why is salary sacrifice car insurance more expensive?

There are two reasons you have to use fleet insurance:

  1. You can’t use personal insurance because the lease is with the employer, not the employee. In this case, the employer is insured and therefore has to take out business insurance. 
  2. To satisfy HMRC company car tax rules, the policy must cover full commercial business use (business use & commercial travelling) to be considered an employee benefit and therefore eligible for salary sacrifice.

Employers that have a salary sacrifice scheme via loveelectric can choose to use our fleet insurance, or use their own fleet insurance via a separate partnership.

As an individual, you could try and organise your own fleet insurance, but you’d most certainly run into many problems. For example, to qualify for fleet insurance, you’d need a minimum of 2-3 cars, not to mention all the paperwork you’d have to do.

Business fleet insurance is typically more expensive than personal insurance; however, the benefit is that the company car can be used for both personal and company use. On top of that, the fleet insurance can still be salary sacrificed, so putting all the costs together, it still works out cheaper than a standard lease or PCP arrangement. 

The other main reason this insurance is more expensive than what you’re used to is that EVs are very fast. They’re also relatively new, so insurance companies don’t have much data yet and err on the side of caution.

The fleet insurance we provide is a fixed rate for the duration of the lease (up to 4 years). It's rare to get an insurer to commit to a price for longer than a year with the current rate of inflation, which gives you the certainty of the cost not changing. loveelectric does not add any fee on top of the insurer's quote.  

loveelectric’s car insurance and maintenance details

After signing up to loveelectric, read through the driver's handbook carefully to understand all the terms. Before joining the scheme, you be will required to sign it as an agreement. We will also provide you with the insurer's fleet policy, which will cover all the topics below in more detail should you wish to read it.

In many cases, exclusions and terms apply, so always read the fine print so you fully understand.

Keep in mind that all the below explanations have exclusions. For more information, check out our webinar or insurers policy.

Here’s what’s included in the insurance:

Glass repair and replacement

You are covered for glass repair under certain circumstances. You can contact the leasing company if you would like them to take over any administration and organisation involved in repairing and replacing glass, including windscreens and body glass, but excluding mirrors and sunroofs. The cost will be recharged to you in full.

Tyres

You are covered for tyre damage as a result of fair wear and tear (including puncture damage which is not the result of a traffic accident)

Accident management

In certain cases, the insurance will pay for damage to a motor vehicle for accidents. In the case of an accident, note all relevant details of others and don’t admit liability or blame at the scene.

Damage to your car

Any damage sustained to the car must be reported to the insurance company or repaired at your own expense. You can refer to your BVRLA Wear and Tear Guide in the insurer's policy for further information.

In the event that the car is written off, you must contact the leasing company using the details provided on page 2 of the driver handbook.

You’re covered for damage to a motor vehicle caused by fire, lightning or explosion. You’ll also be covered for removal and delivery costs, replacement of locks and misfuelling. We will pay the reasonable cost of taking a motor vehicle to the nearest repairer after the damage and returning it to you when the repairs are completed.

Here’s what’s included in the maintenance package with the leasing company:

Repairs & servicing (MOT)

Routine maintenance and servicing costs are covered in the scheme, along with breakdown assistance and recovery.

You are responsible for completing the car’s MOT within the appropriate deadline (where required). This will apply to you where your lease term is for more than three years.

Contact your local garage, or follow the instructions at the beginning of the driver handbook. The garage will invoice the car funder directly.

Breakdown cover and roadside assistance

Our breakdown cover only applies to the UK. You’ll have to contact loveelectric in advance to arrange cover abroad if you travel abroad.

You’ll need to contact the leasing company to arrange recovery from our breakdown recovery partner. Or you can contact the AA directly.

Legal costs

The insurer will pay any legal costs incurred with our written consent regarding any accident under section 2 of the policy (made available to you after you sign up).

This cover includes representation at any coroner’s court or fatal accident inquiry and defending any proceedings arising from death or in a Court of Summary Jurisdiction.

The insurer will pay the costs to help the insured person claim their uninsured losses from the person who was to blame for the accident. The most we will pay for all claims, including any appeal or counterclaim that arise from the same accident, is £100,000 (including VAT).

Theft

Suppose the vehicle is stolen and not recovered or declared a total loss. In that case, a courtesy car is provided for up to 14 days or until a settlement offer is agreed (whichever is earlier).

The insurer will pay for motor vehicle damage, theft, or taking without lawful authority.

Personal accident benefits

Suppose any employees are accidentally injured while travelling in or getting into or out of a motor vehicle, resulting in death, loss of sight or loss of limbs. In that case, the insurance will pay a certain amount direct to the injured person, their legal representative or their estate.

Liability to others

The insurance will cover the costs and expenses you legally have to pay for damages in respect of death, bodily injury or damage to property to any person. This is subject to a limit of £5,000,000 for any one or series of claims arising from any event.

Medical expenses

The insurance will pay up to £500 per person for medical, dental, surgical, or other remedial attention, treatment or appliances for each person if they are injured in an accident involving a motor vehicle.

Personal belongings

Insurance will pay up to £500 for damage to clothing and personal belongings caused by fire, theft, attempted theft or accident while they are in a motor vehicle.

How loveelectric’s sign up process works

Once you fill out an enquiry form, we’ll guide you through the process to get set up with a salary sacrifice scheme. If you’re an employee and would like your employer to sign up, you can refer them and we’ll get in touch with them. 

As an employer, you will be sent an application form and will receive a brochure to help get you up to speed.

Depending on the company size and specific requirements, you will receive a personal call or do a group webinar. This is to answer any of your initial questions, perhaps questions you couldn’t find answers to online. 

The next step is to get your company credit checked by our leasing partners, to ensure they can offer a car lease. This can take a few days, but in the meantime, as an employer you can set up a demo account to start browsing cars on loveelectric.

Once the credit check is complete and successful, as an employer you will be required to sign the service agreement. We’ll send you a unique link to the private web app. From here,  employees are free to browse and place orders with prices based specifically on their profile details. As the employer you will be required to approve any employee order.

How salary sacrifice car Insurance works

Once the employee is ready to place an order on a brand new car, they will see an option to add insurance or not. 

How salary sacrifice car Insurance works

As an employee, you’ll notice there can be a slight difference in the public price compared to the private web app prices given by the unique link. This is because the quotes via the app will be personalised based on your postcode, age, contract term length and annual mileage. 

The insurance cost is bundled into the overall salary sacrifice arrangement and therefore benefits from the same tax savings as the lease cost with no added admin for you. 

You can have up to two additional drivers on this insurance policy, but you can only add one through the web app. You will need to email our support team for help adding the second.

Things to keep in mind with loveelectric’s insurance

We have the only insurer on the market that handles this kind of insurance and also offers dynamic integration – allowing you to easily compare and contrast prices in real time. 

The salary sacrifice scheme arrangement is a formal change to your employment contract. Once agreed, loveelectric will provide an amendment agreement, as the driver will have a new agreement with their employer to forego a portion of their gross salary for this benefit.

A few other things to keep in mind:

As a driver, you need to be aware of your responsibilities 

The driver handbook should be your go-to resource to help you understand how the scheme works and what your responsibilities are. We’ve outlined a few key things to keep in mind with the responsibilities below.

You are responsible for:

  • Advising us of any change in circumstances during the term which could affect your insurance.
  • Ensuring that the car is kept safe, supervised and in your custody until the end of this arrangement.

Not complying with these responsibilities could result in a breach of your agreement with us. This means you could be liable for additional costs, which will be deducted from your monthly salary.

Make sure you’re eligible

There may be restrictions on the car you can choose based on your age (insurance requirements determine this).

To be eligible for this insurance you must be:

  • A permanent employee, paying income tax and national insurance contributions, of a company that has signed up to the loveelectric scheme.
  • Able to afford the salary sacrifice, taking into account the national minimum wage and payable income tax. 
  • Not planning to retire or resign during the term of the scheme.
  • Not reaching retirement age during the term of the scheme (considered to be 67 for the purpose of this scheme)
  • No claims or cat A convictions over three years old 
  • Permanent UK residency 
  • No more than six points on your license

Reconfirm any of these points with your account manager because we can make exceptions on some points. For more details about this, you can read through the eligibility policy.

Not every repair is covered

The car needs to be fully repaired by the time it is returned. So make use of the insurance before this time to avoid fees. 

Repairs not covered by the maintenance service included with the scheme

  • Fluid top-ups
  • Missing trim and items
  • Locking your keys inside the car or losing your keys
  • Running out of charge for the car
  • Abusing the car
  • Accidental damage to the car (where this is not covered by the insurance policy)

There is some amount of wear and tear allowed in this policy, but anything that falls outside this scope will be considered unreasonable wear and tear and will not be covered. See the insurers policy for more details on this.

A few other items are not included

Any parking tickets, congestion fees and other fixed penalties fall outside of the insurance cover. 

The insurance only covers you in the UK. For trips abroad, it is possible to get additional territory added on. Please contact your account manager for this.

The following countries are covered for driving abroad:

      a. all member countries of the European Union,

       b. Andorra, Bosnia & Herzegovina, Iceland, Norway, Serbia and Switzerland (including Liechtenstein).

However, drivers must call loveelectric to extend their cover when taking the car abroad. The countries below will be covered, but we need to make sure they are within their policy limits, which is no 1 single trip exceeds 30 days and they can only go abroad for a max of 90 days in any 1 insurance period. 

The last things to keep in mind are driver abuse, insurance excesses and charging costs are all not covered in this policy.

Insurance questions to ask when signing up to a salary sacrifice scheme

If you sign up with a different salary sacrifice scheme provider, you want to make sure to understand all the term as some companies won't give you such a transparent view of their insurance policy.

First of all, find out if insurance is included in the monthly lease price. The last thing you want is to think you know what you’re paying for the month only for extras to be added through with hidden fees.

A few questions to ask when picking a salary sacrifice scheme:

  • If the insurance is included in the monthly price?
  • If they have gap protection and who is liable if there’s a difference between the leasing company's and the insurer's valuation of the car?
  • Is the premium fixed for the duration?
  • Can you add on additional drivers? If so how many?
  • What are the age restrictions on the policy?
  • What is the excess amounts?
  • Are you covered for both busines and personal use?
  • Who their partners are?
  • If they are specialists and know everything there is to know about fleet insurance and salary sacrifice schemes?

We recommend reading the following article for more information: Best Salary Sacrifice Car Scheme in the UK — Which One is Best for You?

FAQ on loveelectric’s car insurance

We’ve added some frequently asked questions to save time, but if you still have something unanswered join our webinar where you’ll be able to ask questions and get responses live.  

Can I protect my no claims bonus?

Our insurance broker can provide you with a letter, on request, confirming your accident history during the scheme, which you can use to protect your hard-earned no claims bonus.

Many personal car insurance companies accept this when considering no claims continuity, subject to the detail of the history.

Can I get a salary sacrifice car without insurance?

We do have a few companies that have elected to get their own fleet insurance policy. As the business is the customer of the lessor, rather than the employee, the vehicles need to be insured in the name of the business and fully comprehensive - if you have/would like to source a fleet policy you are more than welcome to use it, otherwise we are able to bundle it into the gross quotes for the employee - for the avoidance of doubt, you cannot use personal car insurance with any EV Salary Sacrifice scheme. 

Can an individual get fleet insurance?

As an individual you cannot get fleet insurance as the policy needs to be in the name of the business. You also need to have a minimum of 2 - 3 cars to qualify as a fleet.

By bundling the insurance with loveelectric, it's included in the price, so there is also a benefit from the tax saving on the insurance.

What happens if you have an accident in the car?

Refer to the numbers given in the handbook. In there, you will find every contact you will need for all scenarios. Therefore, it’s worth keeping a copy in the car for such occasions. 

Will I get a courtesy car in the case of a breakdown?

In the event of an accident and regardless of blame, where the car is repairable, a courtesy car will be provided. These are subject to availability and can not be guaranteed.

That courtesy car comes from the repair agent, which is organised by LLG’s Accident Management partner, which is FMG. The courtesy car will be for the duration of the repairs and until such time that your customer collects their car from the repair agent. 

Equally, if it is an at fault accident then FMG will put the driver into a like for like courtesy car and claim the costs back from the other party. So, if they have a Tesla they will try and put them in a Tesla, or something similar.  If the driver is at-fault, then they will get the car that the garage has, which is typically a Fiesta size car.

If the car is a total loss, and therefore the car can’t be repaired, but we can hold the other person responsible, then again, FMG will provide a car of similar standard to what they had.

If the car is a total loss and it is a fault claim, or the car is stolen and unrecovered, then they will not get a courtesy car, as that is not covered under the policy and is not covered under almost all insurance policies in the UK. However, we are talking to an insurer about the possibility of offering a mobility solution for this going forward, and it could be available in around 3 months.

Does the insurer cover any sort of return of the new vehicle?

Not outside normal wear and tear. If in doubt, look at the driver handbook, which covers how to return the car in more detail. 

Does the scheme cover all electric cars?

From our website you can see it covers a wide range of vehicles from small, family and luxury vehicles. However, it does not cover electric motorcycles. 

What's the excess?

If there is an insurance claim, you are responsible for the payment of the excess. This payment will be collected by the repairer of the vehicle or deducted from your salary through payroll.

Examples of the type of excess you might pay:

  • Accidental Damage - excess of £250 for a driver over 24 years of age.
  • Fire, Theft and Malicious damage -  excess of £250
  • Misfuelling excess of £50
  • The excess will not apply if the glass is repaired and not replaced.

What’s the minimum age for additional drivers?

The minimum age for drivers is eighteen and the maximum is 75. Bare in mind that it will be more expensive to insure eighteen year olds. 

loveelectric’s salary sacrifice scheme insurance: don’t stress about insurance again

We hope this article has successfully answered most of your insurance questions on costs and features.

From what we can see, no other electric car salary sacrifice scheme is as transparent about its insurance costs and policy. At loveelectric, we offer worry-free motoring. We take care of everything so it’s as simple as clicking a button for you.

Although we’ve touched on many topics in this article, it’s difficult to cover every minute detail of an insurance manual without it being overbearing. So if anything doesn’t make sense, please let us know or feel free to ask questions in our community.