Company Vehicle Policy- How It Can Cover Your Business Legally

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Running a business is not an easy feat as you need to handle much beyond the regular operations like production, sales, accounting, human resource management, and customer support.

When there is such a lot to do, additional concerns like keeping your business on the right side of the law may take a backseat.

But coverage against litigation is not something you can overlook because legal hassles can cost a fortune and cause reputational damage to your organization. It isn’t something you would want to happen because a lawsuit can put any business off track.

A business that lets its employees drive company vehicles or even ply their personal vehicles for company use is at high risk of facing lawsuits.

Accidents can happen any time they are on the road, and there is a possibility of injuries to the employee, pedestrians, and other drivers who get involved in the mishap. So you can expect to face compensation claims once or more.

It makes sense to protect your business legally, and a proper company vehicle policy is one of the tangible measures you can implement.

Here are some key facts that you need to understand about business vehicle accidents and the employee policy you need to have for risk coverage.

Company Vehicle Policy: 3 Easy Ways to Cover Your Business

1. Understanding corporate liability

Even before you think about drafting a business vehicle policy for your company, you need to understand how your business could be liable if an employee has an accident while driving a fleet vehicle.

When an employee hits a pedestrian or another vehicle, the victim can sue your company rather than the driver under the vicarious liability clause.

They would prefer to do it because lawsuits against companies are high-value as compared to those against individuals. It means that victims can claim a higher settlement value from the employer rather than the negligent employee.

The victim’s lawyer can use one of the following arguments to prove corporate liability and get your business in a fix.

  • Respondeat superior, which means that the employee was working within the scope of employment when the accident occurred, so the employer would be responsible for their negligence.
  • Negligent hiring or retention of an employee who is not capable of handling the vehicle also puts the liability on the business.
  • Negligent lending of a vehicle to a person unfit to drive is another form of negligence that translates into the company’s fault.
  • Negligence with vehicle maintenance, which led to the mishap, is regarded as employer negligence and gets them into legal trouble

2. Setting a company vehicle policy can curb stress

It is clear that your business is at legal risk if employees drive around vehicles it owns. Having a company vehicle policy in place is valuable as it can curb stress and even limit the liability of your company at times. For example, the right policy can cover a business for respondeat superior liability.

You can include a clause that prohibits workers from using corporate vehicles for personal use. With it, you can easily prove that your company is not liable for their negligence when they are working out of the scope of employment.

For example, the liability for an accident that happened during lunch hours would not fall on the company, even if the employee was in a business vehicle.

It is vital to draft the policy with care so that you can use it to your advantage if an accident occurs. Some extremely helpful car accident lawyers would be willing to guide you about the clauses you can include for ensuring the best legal coverage.

Additionally, include the procedure for reporting and handling accidents and claims so that employees have a clear understanding of such situations. Make sure that you provide a copy to each employee who is authorized to drive company vehicles.

Also, draft it in clear language to avoid confusion.

Company Vehicle Policy: 3 Easy Ways to Cover Your Business

3. Going the extra mile with additional measures

Having a company vehicle policy covers your accident risks and liabilities to some extent. You can take some additional measures for extra safety.

Invest in only the best vehicles that meet the highest safety standards so that the chances of accidents are reduced to a minimum. If possible, invest in telematics technology for tracking vehicles and drivers on board.

It is equally important to obtain and maintain insurance on all business vehicles so that you are stress-free about compensation claims, even if they arise. These policies can cover you for legal expenses as well as victims’ compensation.

You also need to be careful while hiring people who would be required to operate business vehicles as a part of their duty. Checking their driving records makes sense as they give a clear idea about their capabilities.

Having proper training programs for the employees also goes a long way in preventing mishaps. If an employee gets involved in a mishap, find the cause and enrol them in a special training program to prevent the same mistake in the future.

Prioritizing safety in your work culture discourages the workforce from being negligent.  Also, keep a close track of each vehicle in the fleet and ensure that they are in good shape. Conduct periodic maintenance and scheduled safety checks on them.

Encourage people to report maintenance issues at the earliest and invest in timely repairs. Document the checkups and repairs so that you have a proper record if you need to validate facts in court when facing a lawsuit.

Car accidents are hard to avoid, and even the most careful drivers can make mistakes once or more. For a business that uses corporate vehicles in routine, taking relevant measures to cover themselves legally makes sense.

Companies often have to pay massive amounts in compensation to the victims, even if the mishap occurs due to the negligence of the employee. It is vital to steer clear of such accidents and have a proper legal strategy to address them if they still occur.

Just being proactive about legal coverage can save your business from big trouble in the long run.

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