Broker warning on staff using own cars for company business
Commercial insurance specialists Alan & Thomas Insurance are warning local businesses of the potential directors' liability risk when allowing employees to drive their own cars on company business.
"If you permit employees to use their own cars for company business, either by providing a business mileage allowance or an annual cash allowance, irrespective of who owns the car, as a director you have a legal duty to ensure the vehicle is safe or risk being held responsible for the employee's negligence in the event of an accident, by virtue of vicarious liability".
The definition of safe for this purpose includes ensuring that the vehicle is correctly insured for business use and, if necessary, insured to carry work colleagues as passengers; is mechanically sound and roadworthy, with a valid MOT certificate (when required); is routinely serviced in accordance with the manufacturer's recommendations (or even additionally covered by an appropriate breakdown service) and is suitable for the planned journey.
"In addition, directors must satisfy themselves that journeys undertaken for any business purpose by employees are properly controlled, including ensuring that employees are licensed to drive and have not been disqualified; be satisfied that the itineraries are not excessive in terms of the time spent driving or anticipated mileage and that employees take care when scheduling appointments that require a very early or late departure, as statistically these are vulnerable times".
An administrative paper trail is required to prove such checks have been carried out, as well as evidence of appropriate policies. Simply having the policies drawn up is insufficient; the employer must also take reasonable steps to ensure they are followed, warns Alan & Thomas.
Directors must also ensure that employees driving on company business do not have an invalid license. It is estimated that one in twelve UK drivers have inadvertently let their licences expire – with many drivers unaware that photo licences must be renewed every ten years. Drivers can be fined up to £1,000 by the DVLA for driving on an invalid licence.