Tuesday, April 12, 2011

Do employers reimburse enough for business use of personal auto? What about $4 gas? What about "business use" auto insurance?


People who take jobs involving their personal autos for business, when they have not done so before (including retirees) may want to be careful about their auto insurance coverage and make sure that the reimbursement rate offered by the employer is adequate for increased premium.

In northern Virginia, coverage for business use (reimbursed and “on the clock” or part of the workday) without special hauling tends to cost about $120 or so for about 6 months for about 200 miles a month of driving, or about 10 cents a mile for business insurance.

Here's a checklist from "Women's Finance" on "Does your vehicle insurance cover business use?"

Or check this question, "Do I need commercial auto coverage", from About, which is more about advice for small business owners, but it says you need it if you use (individually) "titled vehicles" for the conduct of business.

CompuQuotes has an advice page on business use of a personal vehicle, here.

Since gasoline prices have spiked, it’s instructive to do an “Algebra I” “story problem” with gasoline per mile costs. At 20 miles per gallon, $4.00/gallon gasoline would cost 20 cents a mile (5 miles per dollar, like a physics problem  -- school gets easier with real-life allowance problems, doesn’t it).
 
The IRS business mileage rate for normal passenger vehicle use is 51 cents a mile right now in 2011.  IRS rules are written up in a manner to suggest that insurance was taken into account. But the IRS will certainly face political pressure to raise the rate soon, as was done in 2008. In many urban locations, gasoline is already over $4 a gallon.

Here’s a link about the 2011 rules 

The IRS publication on the matter is here

Here’s a blog on what the IRS did in 2008 (during the Bushie pre-crisis oil price spike), from the point of view of nannies who use cars for business. 

 It was as high as 58 cents a mile at one point.

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