Using insurance rate bandings means that drivers still retain much of the choice that makes opting out so attractive, but employers can also ensure that they also keep some control of what they drive.
Insurance group ratings reflect the value of vehicles, but also key risk categories, such as more powerful engines and those models commonly targeted by thieves or involved in accidents.
According to Provecta Car Plan, one of the largest employee car ownership providers in the country, it is a preferred method for many businesses.
Managing director David Voss said: ‘It is an objective method that allows a company to point to an independent standard by which it has set vehicle choice.
‘If you say to drivers that their allowance can pay for a car up to a certain insurance banding, then it is a clean, simple process. It can’t be disputed.
‘Behind that the fleet can set the other rules necessary for a vehicle to be used on business.’
Fleet NewsNet reported recently that figures from HM Revenue and Customs showed a sharp rise in the number of people covering business mileage in private cars (Fleet NewsNet, August 11).
Many of these drivers have moved into structured personal car schemes, which provide the equivalent benefits of a company car but with ownership passed to the employee so there is no need to pay company car tax.
Using a properly structured private ownership scheme allows companies to retain more control of drivers and use their allowance more efficiently than if drivers were simply paid a cash lump sum and given no restrictions on how they spent it.