There are times when you’ll ask an employee to use their own vehicle for company-related business. This is reasonable and common – but the practice must be limited to employees who previously have been authorized and pre-qualified to do it.
While that employee’s personal auto policy provides primary coverage for an at fault accident while on the job, your company may be held liable for losses beyond those coverage limits. If you don’t ensure that the employee has adequate vehicle coverage (ideally $100,000/$300,000), your direct costs could be significant in the event of an accident.
To minimize this financial risk, before an employee is authorized to drive on behalf of the company, and at least annually thereafter, be sure to obtain that driver’s motor vehicle record (MVR) to determine the level of risk the employee poses.
Work with your insurer to draft a policy statement that describes your expectations with regard to safe driving practices, insurance coverage, circumstances that warrant the use of a personal vehicle, qualifications for the driver, obeying all relevant traffic laws, maintaining the vehicle, and promptly reporting accidents. Eligible employees should sign this agreement annually, perhaps in conjunction with an annual review.
If you require training for authorized users of company vehicles, employees that use their own vehicles should be required to undergo the same training.
In short, you should take dual approach to the personal use of vehicles for company purposes: ensure there is adequate insurance coverage and enforce practices that help reduce the risk of loss.