Company cars are a very popular form of benefit-in-kind. Most employees appreciate them, taking care of them and putting in more work as thanks for the trust you are showing to them. But businesses can face certain liabilities when it comes to the use of company cars, and not every employee can truly be trusted to drive them.
A company car should be treated like any other potentially dangerous piece of machinery – carefully monitored and only trusted to employees who have proven that they are worthy of it. But even if you’ve got the very best team, you still need to make sure that the vehicles are properly insured. Nobody wants to pay the bill on a car accident. These are costly even when covered because the premium will rise. And at the end of the day, any damages incurred through the use of a company asset can leave your business liable.
Under What Grounds Does This Happen?
When you business is held responsible in this way, it typically falls under one of four categories:
Respondeat superior: Essentially, if your employee is at fault for an accident and was doing work for you at the time of the accident, you can be held responsible. The name comes from a Latin term meaning ‘let the master answer.’
Negligent hiring or retention: This refers to poor choice in employees, and the legal basis of it is that you shouldn’t hire, or retain, someone who is inappropriate for driving a vehicle, if issuing a company vehicle is a requirement of the job description.
Negligent lending of a vehicle: The same as above, but usually refers specifically to cases where the vehicle is a benefit-in-kind, as opposed to a necessary part of the job.
Negligent maintenance of a vehicle: Under this claim, the employee’s lawyer will be arguing that the vehicle was poorly maintained, and thus the employee is not at fault for the resulting damages.
Reducing Your Liability:
There are several easy ways of reducing the likelihood that such a claim would leave your business liable. For respondeat superior, you need to make the case that the employee either wasn’t doing something related to their job or that your company has a standing policy against whatever actions they took. This isn’t always possible, and you’ll need to rely on business insurance providers like Oros Risk Solutions — sometimes even in cases where the employee in question was using their own vehicle at the time of the accident.
For both forms of negligence, you need to show that you were simply not negligent. When hiring, make sure to check if the employee has any mental or physical disabilities that would make them unsuitable to drive. This, along with proving that there was nothing wrong with the employee (check and record their license) should protect you. And when it comes to negligent maintenance, it’s important to keep records of maintenance properly filed and up-to-date, so you can prove that you exercised due diligence.
Suggestions For Vehicle Policies:
In general, the fewer employees that are on the road for your business, whether in their own cars or through the use of fleet vehicles, the better. Ensuring that your business model is properly protected through insurance will similarly leave your business less exposed to this sort of risk. But other practical considerations can help you reduce your liability picture. For example, if the employee needs to make a long commute from the office to the workplace, and their home is closer, it may be more practical to let them commute straight from home. You also need to make sure employees take any policies relating to the use of vehicles for business purposes seriously. Use broad-ranging language to make sure that you’re covered in the event of an incident, and always make sure that illegal activities are strictly prohibited and that a drug-free workplace program is in place.
