Whether a company owns 100 vehicles or none, it faces exposure to a loss arising from automobile use.
From a risk management perspective, four types of exposures exist: property, personnel, income and third-party liability. Automobiles can impact all four. In the event of an auto accident, a vehicle can be damaged, as can business personal property (property exposure); employees can be injured (personnel exposure); business revenues can be impacted (income); and the company can become a defendant in a lawsuit (third-party liability).
Often, vehicles are a company’s largest exposure. Because of this, it is imperative that all businesses:
- analyze the exposure arising from their automobiles;
- determine how to prevent losses, as well as manage and control those exposures;
- decide how much of the risk they want to transfer to an insurance company; and
- remain diligent in reviewing their changing automobile exposures to effectively manage risk.
Owned VehiclesAutomobile loss exposures can be managed with a well-written vehicle fleet safety program. At a minimum, the program should include a policy statement that provides a general overview of the company’s philosophy on managing exposure to auto losses. A written safe driving contract also should be required of all affected employees.
Additionally, be sure to address vehicle use. If an employee has a company vehicle or is allowed to use one when necessary, it is important to spell out when and how the vehicle can be used. Is it available exclusively for business purposes, or can the employee use it for personal reasons as well? Are other people authorized or prohibited from using the vehicle?
Driver Eligibility and Responsibility
Regardless of who is allowed to operate a vehicle on behalf of the company, the driver should meet certain eligibility standards—including legal age and defensive driving requirements—and comply with vehicle safety and traffic laws.
This applies not only to company-owned vehicles, but also to employees who use their own vehicles for company business. Run motor vehicle reports on a regular basis and make certain everyone understands what qualifies as an acceptable driving record. Driving privileges need to be revoked if an employee fails to meet the company’s requirements.
Employees should be required to report all traffic violations and accidents, as well as maintain the vehicle according to the manufacturer’s service, maintenance and inspection schedule. Employees also must understand the company’s expense and maintenance reporting requirements.
What to Do in Case of an Accident
Steps taken immediately after an accident can significantly impact the resolution of any disputes. Because drivers often don’t follow basic procedures, it is worthwhile to enroll staff in post-accident response training.
In addition, every vehicle should have a claims kit in the glove box that provides step-by-step instructions on what to do in the event of an accident. The company also should appoint a claims officer or manager as the post-accident point of contact.