8 Tips on Using Employee-Owned Vehicles for Business Purposes
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Employees’ use of their personal vehicles is often required by an employer. While an employee’s automobile insurance policy will provide the primary coverage in the event of an accident caused by an employee while working, your municipality or educational institution may be held liable for losses exceeding the coverage limits. As such, you need to assure there is sufficient coverage and also needs to have policies in place to reduce the risk of loss.
Here are some tips if you plan to let employees use personal vehicles for work.
- Policy Statement – A policy should be developed and provided to all drivers that outlines the minimum expectations of the business. The policy should be signed by all employees and kept in their personal file. The policies you have in place for your owned vehicles should be the template for the non-owned policy.
- Insurance Coverage – You should decide on minimum limits the employee should carry. I recommend a combined single limit policy limit of no less than $500,000. Once this is established each employee should provide you with a copy of their insurance policy. This should be kept on file as well.
*You must purchase non-owned liability insurance for the excess coverage to be in place. Employees should understand that coverage is provided on an excess basis only and not primary. They should also know that they are responsible for physical damage coverage.
- Driver Qualifications – All designated drivers should be qualified. They should have a valid drivers license, and you should obtain an MVR initially and annually thereafter for each driver. You should establish consistent criteria for driving credentials.
- Driver Policies – It should be clear that all employees should comply with all laws and state regulations. All drivers should be required to use safety restraints. The use of cell phones and other communication devices should be strictly prohibited, except in emergencies. Use of alcohol or controlled substances should be banned during working hours.
- Supervision - Drivers should be given parameters. For example, scheduling appointments too closely can encourage speeding and reckless driving.
- Training – Annual training utilizing the employee’s vehicle should be conducted.
- Maintenance – Employees should fully understand that they’re required to maintain their vehicle in accordance with the manufacturer’s service guidelines.
- Accidents – All accidents involving owned or rented auto should be required to be reported immediately. Details of the incident should be properly recorded by the company in the event the company is involved in future litigation.
If you have questions about the need for this coverage, please do not hesitate to ask us. We have a variety of templates that you can use to build your program.
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