Whether you deliver flowers for a floral shop, own a catering business or work at a consulting service that requires you to travel to your customers, you probably operate a company vehicle. While you might think it’s not that big of a deal to lend your company car to a friend or family member, it actually could be. If something happens to your company vehicle while being driven by someone else, your insurance premium will be negatively affected if the person borrowing your vehicle is in an at-fault accident. Your claim could be denied, leaving you personally responsible for damages
So when allowing others to drive your company vehicle, even other employees, it’s important that you first do your due diligence.
Questions to ask before lending out your company vehicle
Before allowing anyone else to get behind the wheel of your company car, it’s important that you ask the following questions:
- Does the person you’re lending the car to have a proper driver’s license for the type of vehicle they’re using? (You may wish to obtain a copy for your records if they give you permission to do so).
- What will they be using the car for?
- How long will they be needing to use your car?
- Where will they be travelling (out of province, out of the country, etc.)?
- Will they have any passengers in the vehicle, and if so, how many?
- Before driving, will they be consuming any alcohol?
The risks of lending out your company car
If something happens to your company car when someone else is driving it, your insurance may be affected– you’re essentially lending your insurance when you lend your vehicle. If the person who drives your car is involved in an at-fault accident, the claim goes through your policy and affects your rates. As the vehicle’s owner, you can also be responsible for covering the damage costs if your policy limits aren’t high enough.
Keep in mind that first or third-party coverage may be affected if the driver does something that violates your insurance policy and gets involved in an accident. You could then be implicated in the third-party insurer’s recovery attempt, as they’ll sue both the driver and vehicle owner. Your insurance coverage won’t respond to the loss as a result of the violation, so you and the driver will have to pay for your own legal counsel and may need to compensate the third party as well. Your coverage may be similarly affected, and the same scenario may play out if you use your personal vehicle for business purposes when you have indicated that you only use it for personal purposes.
Best practices for lending your company vehicle
If you do decide to lend out your vehicle to someone else, keep in mind these best practices:
- There should only be as many people in the vehicle as there are seatbelts.
- See if there are any restrictions on the license of the person that you’re lending the vehicle to. Younger drivers especially may still be in some stage of their Graduated Driver License which places restrictions on their driving status.
- Giving someone keys to your company vehicle gives them consent to drive it – even if there was no written or verbal agreement.
- Vehicles with company logos can be great advertising but may also be detrimental to your business’ image if the car is used irresponsibly or gets in an accident.
There’s no way of knowing what’ll happen when you lend your company vehicle to somebody else, or use your own car for business purposes. However, by doing your due diligence, you can better decide what to do with your personal or company car.
Protect yourself and your business with insurance
Despite your best efforts to take all necessary precautions, accidents can still happen on the road. That’s why having the right coverage in place is crucial. To learn more about how insurance can help protect your business, visit our Transportation Insurance page today!
