Companies have all sorts of assets and expenses. One of the biggest line items in both of those categories is a company vehicle. They can be solely for business use or a car that doubles as a personal vehicle outside of work hours.
Vehicles are a necessity for some businesses, but the legal team at Bachus & Schanker LLC cautions that company vehicles are a significant liability. However, they note that there are steps you can take to limit the liability before and after an accident.
Choose Safe Company Vehicles
The vehicle itself is going to have a huge impact on insurance costs and potential liability. Whether you’re buying a van for your business deliveries or a luxury sedan to impress clients, safety should always be the top priority.
You can find vehicle safety ratings at the Insurance Institute of Highway Safety and also check out reviews through Kelly Blue Book. If you are buying used, you’ll need to take a few extra precautions to make sure there aren’t any underlying issues. Find a mechanic you trust and ask to have them inspect the vehicle before buying it. You can also use a service like CARFAX to find out if the vehicle has been in an accident.
Get Ample Insurance Coverage
A company vehicle is not the place to cut corners in order to limit costs. The stakes are too high not to be fully covered in every situation. Even if the vehicle is used for personal travel and errands, it needs to be covered by commercial vehicle insurance if the title is under the company’s name.
If employees are using their own vehicles for business, you’ll need to ensure that they have adequate coverage through their personal policies. You can also choose to add a non-owned auto liability endorsement to your commercial vehicle insurance policy. This will give you an extra layer of protection if someone tries to sue your company after an accident.
Always Do an Extensive Background Check Before Handing Over the Keys
In addition to the vehicle, the employee can affect your liability potential. Only employees with clean driving records should be allowed behind the wheel of company-owned vehicles. You can find this information by doing background checks that include employee driving records. The record will note how many tickets they have received, any DUIs as well as reported accidents they were involved in.
Employees must also understand that if anything changes with their driving record, you should be notified immediately.
Keep the Car in Perfect Operating Condition
One of the biggest liability potholes is a company vehicle that isn’t in pristine operating condition. If components aren’t working properly it could be the employee that ends up complaining or suing after an accident.
The best place to start is with the operator manual. Within the manual there will be a guide with a suggested maintenance schedule. Follow it to a T. You should also do regular driving and visual inspections of each vehicle at least once a week. This can help you spot potential safety hazards, things that need to be looked at by a mechanic and damage that the employee may have done. If a vehicle needs a safety-related repair, get it fixed ASAP and don’t use the vehicle in the interim.
Each time maintenance and inspections are done it needs to be recorded in a log. You’ll also need to keep receipts of maintenance, improvements and repairs as proof in the event there is an accident as well as for tax purposes.
Coach Employees on How to Handle Accidents That Happen in Company Cars
The events that unfold after an accident in a company car can greatly impact your liability. Employees need to be advised on how to handle an accident if it should occur so that both you and they are protected.
Employees should do the following immediately after an accident:
- · Call the police.
- · Call the office – Someone in HR or management should reach out to the insurance company to let them know an accident has occurred.
- · Keep a level head even if the other person is irate.
- · Get the other person’s insurance information.
- · Take pictures of the scene and damage.
One critical point that has to be stressed to employees is that they should never talk with the other person’s insurance company directly. Even if the agent or adjuster seems helpful, everything the employee says can and will be used against you in a lawsuit. It is also highly advisable that a company seek the services of an experienced attorney if they are sued after a car accident.