Are your 'Grey Fleet' drivers correctly insured?

Are your 'Grey Fleet' drivers correctly insured?

2nd, Jul 2018 General News

One of the biggest misconceptions surrounding driver and vehicle compliance is the assumption that an employee-owned vehicle is not subject to the same regulation as a company-owned vehicle. 

UPDATED 2nd July 2018 with comments from Laura Newton, Transport Solicitor at Law Firm Rothera Sharp.

Laura Newton, Rothera Sharp

MOTORING INSURANCE CONSIDERATIONS FOR BUSINESSES AND EMPLOYEES

“As a driver of any vehicle, it is important that you take appropriate steps to ascertain the validity of your insurance. Driving without insurance carries 6-8 points, or a disqualification, and a substantial fine. For a professional driver or a company holding an Operator's Licence, a conviction of this kind can also leave them open to regulatory action by the Traffic Commissioner.  

“If you are driving your own vehicle for work, your insurance policy will need to cover business use and usually cover will be limited to a particular area of work. Business use is not normally included in a policy without a specific request. “An employer cannot absolve themselves of responsibility by simply leaving it to the driver, as the company can also be guilty of using a vehicle without insurance if driving is being carried out on behalf of the company and there is no valid policy of insurance in place.  

“Where an employer is the owner of the vehicle, they will have to comply with the specific terms of the policy which may define the scope of the work and there may be age restrictions or a limit to endorsements on the driving licence, in order for a particular driver to be covered under the policy. It is important for a business to check through the particular terms of the policy and set out any restrictions to the drivers as part of the driver handbook. Where an employee is driving a vehicle owned by their company, during the course of their business, which transpires not to be insured, they may have a defence in law as long as there was no reason to suspect that they were not covered.”  

 

The reality is that ANY vehicle which is used for business purposes is subject to the company’s Duty of Care, irrespective of vehicle ownership or job description.  This same duty of care is owed whether the employee works in finance and drives to the bank once a month or drives a delivery van for the company every day.  In each case the employee must be suitably trained and their vehicle should be reasonably safe to use and fit for the purpose.

It is therefore critical that businesses take the appropriate steps to ensure that the driver is eligible to drive and the vehicle is road worthy, taxed and insured.

Now this is where it gets a little confusing… and it’s all down to terminology. Most standard private car insurance policies don’t actually cover any form of business use, other than perhaps driving to and from a place of work. The majority of insurance policies taken out for private vehicles will specifically cover ‘social, domestic and pleasure’ use, but may not include any form of business travel cover or provision and as such would not cover the employee for using their vehicle during working hours for a number of common activities such as:  

-          Driving to meet a colleague or client or drop them off somewhere

-          Driving to a training course

-          Driving to the bank for the company or to a post office to send or pick up a parcel

-          Driving between depots and branch offices

-          Attending off-site company events

If a private car is used for anything related to a business beyond commuting, such as the actions described above, the driver will need business class insurance.  Even in the case of commuting to and from the place of work, suitable wording should be included in the policy.

There are three basic kinds of business cover; Class 1 (extended cover for the private individual), Class 2 (cover for named drivers) and Class 3 (cover for commercial sales-people).

The majority of grey fleet drivers will require Class 1 business insurance as an extension to their normal basic policy cover.

Unfortunately, not every insurer conveniently refers to business class insurance as “Class 1”, “Class 2”, etc. so, the obligation falls upon insured drivers to make sure they specify the exact levels of cover they require.   Sometimes, the policy is extended at no extra cost, but sometimes there is a fee to include this extra cover.   Although the Consumer Insurance Act 2013 has made useful changes to protect drivers who accidentally or inadvertently fail to disclose information to their insurer, the responsibility to respond truthfully and accurately to questions about whether the vehicle will be used for work purposes remains with the driver. 

Finally, don’t assume the Certificate of Motor Insurance tells the whole story.   The important document in each case is the policy schedule or booklet. It is within these documents that any restrictions or exclusions will be listed.   If in doubt, contact your insurer and broker to check that you have the right cover.   A call or email now can save an awful lot of worry and expense should you be unlucky enough to have an accident whilst driving for work.