How Company Car Accidents Affect Insurance Coverage: What Employers And Employees Need To Know

Employers bear significant responsibility in managing company car insurance. Key responsibilities include:

Employers must ensure that their insurance policy adequately covers all potential risks associated with the use of company vehicles. This involves carefully evaluating the specific needs of the business, considering factors such as the types of vehicles in use, the nature of the business operations, and the driving environments employees will encounter.

This includes routine checks and servicing of vital vehicle components such as brakes, tires, lights, and fluid levels. Scheduling regular inspections can help identify and address potential issues before they lead to accidents.

Employers should establish a maintenance schedule and ensure compliance with manufacturer recommendations. Additionally, keeping detailed maintenance records can be beneficial in the event of an insurance claim, as it demonstrates a commitment to vehicle safety and reliability.

Comprehensive training programs should be developed to educate employees on safe driving practices, company policies, and relevant traffic laws. Ongoing training and refresher courses can help reinforce safe driving behaviors and keep employees informed about new regulations and safety techniques.

Driver screening should include: 

• Background checks
• Verification of driving licenses
• Assessments of driving history to identify any past issues that could indicate a higher risk of accidents

Employers must understand their legal obligations, including compliance with state and federal regulations. These obligations can include maintaining proper insurance coverage, adhering to vehicle safety standards, and ensuring that drivers are legally qualified to operate company vehicles.

Failure to meet these obligations can result in severe penalties, increased liability, and legal action against the company. Staying informed about regulatory changes and seeking legal advice when necessary can help employers navigate the complexities of legal compliance and protect the business from potential liabilities.

Accidents involving company cars can lead to increased insurance premiums. Insurers typically assess premiums based on the company’s claims history, the severity of past accidents, and the overall risk profile of the business. Employers need to monitor their claims history closely and work with their insurer to manage costs.

Employees using company vehicles also have specific responsibilities:

• Follow all company policies and applicable driving laws to ensure their safety and the safety of others.
• Prompt and accurate reporting of accidents. Employees should know the company’s procedures for reporting incidents.
• Understand their personal liability in the event of an accident, especially if they are found to be at fault or were using the vehicle for unauthorized purposes.
• Be aware of what the company’s insurance policy covers and any exclusions that might apply.
• Follow a standard protocol after an accident, including ensuring safety, contacting emergency services if needed, and documenting the incident thoroughly.

In certain scenarios, personal auto insurance may play a role in covering incidents involving company cars.

Here are some key situations where personal insurance could be applicable:

If an employee uses their vehicle for company business, their personal auto insurance policy may be the primary source of coverage in the event of an accident. Employees need to inform their insurance provider about the business use of their vehicle to ensure adequate coverage.

When an employee drives a company car outside of work hours for personal errands or leisure activities, their personal auto insurance may need to cover any accidents or damages that occur. Employers and employees should clarify the extent of personal use allowed and ensure that insurance policies reflect these uses.

In cases where the company’s insurance coverage is insufficient to fully cover the damages or liabilities resulting from an accident, an employee’s personal insurance might be tapped to cover the remaining costs. This situation can arise if the accident involves significant property damage or severe injuries.

If an employee uses a company vehicle without authorization and gets into an accident, the company’s insurance may not cover the incident. In such cases, the employee’s personal auto insurance may become responsible for covering the damages and liabilities.

During business trips, employees might use company cars for non-work-related activities, such as sightseeing or visiting friends. Accidents occurring during these personal activities may require coverage from the employee’s personal auto insurance, depending on the terms of the company’s policy.