Managing Company Car Risks: An enterprise-wide approach

Different types of vehicles in a row with blue skyy

In today’s competitive and dynamic job market, a company car scheme might provide the edge in attracting and retaining talent. Rather than operating a grey fleet, where employees drive their own personal vehicles for work, a company car could present an opportunity for staff to raise their professional image; improve their mobility; or simply benefit from a paid-for transportation offering.

Private car fleets feature in a considerable number of UK business models. However, risk management arrangements for company vehicles are often insufficient in comparison to commercial fleets. It is crucial to treat both risks as equally important to safeguard employees, manage claims costs, and avoid company liability in the event of an accident.

Knowing Your Risk Exposures

Physical vehicle risks

Seniority is not a prerequisite to owning a company car. However, top management represents a significant share of company car drivers, and employees in this cohort are more likely to drive high-performance vehicles. Subsequently, this may result in:

Heightened security risks rising from the allure of prestigious, desirable brands (there were 105,446 motor vehicle thefts in England and Wales in 2021).
Increased maintenance and repair costs.
Longer lead times for specialist mechanics, delivery of key parts, and suitable hire cars.

As the transition to net zero continues, companies incorporating electric vehicles (EV) into their private car fleet must evaluate whether an employee’s domicile is suitable to accommodate EV charging, as well as their liability if there is an accident relating to the infrastructure.

Driving safety culture

The Health and Safety at Work Act 1974 requires employers to ensure, within reasonable practice, the safety of both employees and those not under their employment. This imposes a legal requirement upon employers to evaluate all risks associated with work-related driving activities. Alarmingly, a study noted that policymakers displayed a ‘lack of attention to work-related road safety’. The study went on to estimate, highlighting the scale of the issue, that roughly one in three road deaths and one in four casualties are suffered when employees are driving for work.

Occasionally, no harm at all is required for legal action. Sufficient proof that an employer did not take reasonably practicable measures to address a significant risk of harm can result in prosecution. If a fatal road accident is ruled as the consequence of safety management failings, a company could be prosecuted under the Corporate Homicide Act 2007. It is therefore crucial that organisations understand how their duty of care applies. Businesses should encourage safe driving habits throughout the workforce and manage risk on a continuous basis.

Taking action

Senior management should influence safety culture and act exemplary in their own conduct, in order to encourage the principles of risk awareness and accountability. Rules must be applied equally and impartially throughout the company hierarchy; from the C-suite through to junior level employees. Employers may also consider imposing an upper limit on vehicle value, partnering with a preferred repair service provider, or installing GPS trackers in cars to manage costs and control the risks associated with theft.

Before an employee is granted access to a company vehicle, additional preliminary control measures could include:

Proof of a valid, in-date driving licence.
Declaration of any previous accidents, driving-related convictions, or speeding infringements.
Specific and appropriate training that outlines a clear policy of expected driving behaviour.
Consideration of the appropriateness and necessity of permitting friends or family to be insured on the policy, along with reasonable restrictions.
Confirmation that manufacturer recommendations, vehicle-usage manuals and company policies have been read and understood.
Policies around driver fatigue, with restrictions on driving after a prolonged period of work.
A clear mobile phone policy that is widely communicated, integrated, and enforced.
Regular advice on problematic driving conditions; such as in winter or heavy rain.
Installation of telematics in the vehicle.
If relevant, risk assessment of domestic premises, and whether EV charging infrastructure can be safely accommodated.

Throughout an employee’s custody of a company vehicle, continual control measures could include:

Regular review of telematics data to identify high-risk driving behaviour.
Access to educational resources, such as advice on Highway Code legislation and mobile phone use and accident-reporting policies.
Online or mobile training applications.
Post-accident investigations and damage-accountability guidelines.

Company car fleets can be challenging and complex to manage. However, businesses that construct an employee-wide framework for risk assessment and control, can increase workforce safety, save on claims costs, and improve defensibility against potential liability resulting from company-car collisions.

Article

Managing Company Car Risks: An enterprise-wide approach

Knowing Your Risk Exposures

Physical vehicle risks

Driving safety culture

Taking action

Meet the authors

Alistair Schuberth

Zoe Parkes

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