{"id":6186,"date":"2020-06-20T12:18:57","date_gmt":"2020-06-20T10:18:57","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=6186"},"modified":"2020-06-20T12:18:57","modified_gmt":"2020-06-20T10:18:57","slug":"fleet-vehicles-2","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/06\/20\/fleet-vehicles-2\/","title":{"rendered":"When to Restrict Personal Use of Fleet Vehicles"},"content":{"rendered":"

Business Fleet\u2019s<\/em> sister publication,\u00a0Automotive Fleet<\/em>\u00a0surveys commercial fleet managers each year\u00a0on personal use charges\u00a0and policies.\u00a0In this year\u2019s survey,\u00a0fewer respondents were lenient on the idea\u00a0of\u00a0granting anyone other than the employee the ability to drive a fleet vehicle for personal use.\u00a0\u00a0\u00a0<\/b><\/span><\/p>\n

As unbelievable as it may seem, many fleets, large or small,\u00a0do not have a policy\u00a0regarding\u00a0personal use of company-owned vehicles. Failing to have policies and procedures \u201cgive the employee the feeling of having free rein when it comes to use of a company vehicle,\u201d according to Nicole Long, senior vice president of Brown & Brown of Florida Inc., an insurance and risk management firm.\u00a0<\/span><\/p>\n

According to Bill\u00a0Stueber, regional vice president of Merchant\u2019s Fleet, a fleet management company, many fleets have never even thought about the need for such a policy. \u201cFrom a safety and liability perspective, they need to have some type of policy and it needs to be written down and signed by the affected employees.\u201d\u00a0<\/span><\/p>\n

Stueber\u00a0adds that the policy\u00a0should\u00a0include specifics about what\u00a0employees\u00a0can and cannot do. Owners often think that the employees understand that although they can take the vehicle home, they cannot drive it for personal use. \u201cFrom an insurance perspective, did you tell the employee that? Were they aware of the policy? Did you have it in writing?\u201d\u00a0he says.\u00a0<\/span><\/p>\n

Common\u00a0Practices\u00a0<\/span><\/h2>\n

While there is no set formula for what to include in a personal use policy, there are some common things to consider. In addition to the employee, will the spouse or children be allowed to drive the vehicle?\u00a0<\/span><\/p>\n

According to data from\u00a0Business Fleet\u2019s sister publication,\u00a0Automotive Fleet, 40% of fleets surveyed (see chart) allow an employee\u2019s spouse to drive the vehicle, while only 6% allow an employee\u2019s licensed children. Long says the best practice is \u201cnot to let the spouse or any family member drive the vehicle.\u201d\u00a0<\/span><\/p>\n

Long says many policies have a provision that any driver\u00a0must\u00a0be over the age of 25.\u00a0It goes without saying that anyone who is going to drive the vehicle must have a valid driver\u2019s license.\u00a0<\/span><\/p>\n

Both\u00a0Stueber\u00a0and Long advise that the\u00a0fleet\u00a0owner check the motor vehicle records for anyone who will be driving\u00a0its\u00a0vehicles. The MVRs should be obtained initially and then reviewed annually.\u00a0<\/span><\/p>\n

The fleet\u00a0can set time parameters\u00a0for\u00a0various\u00a0violations. For example,\u00a0someone\u00a0who has had\u00a0three speeding infractions less than 20 miles over the posted speed limit in a three-year period\u00a0should consider preventing this person\u00a0from driving a company-owned vehicle.\u00a0Some\u00a0fleet\u00a0owners check MVRs as far back as five to seven years, while others just look at the last three years.\u00a0<\/span><\/p>\n

Other\u00a0Restrictions\u00a0<\/span><\/h2>\n

In addition to checking MVRs, the\u00a0fleet\u00a0owner can set policies for other things based on their risk tolerance, Long says. This would include things like pulling a trailer or a boat, having infants in the car,\u00a0or\u00a0taking a vehicle across state lines.\u00a0\u00a0<\/span><\/p>\n

The fleet owner should consider setting mileage limits for personal use of a company vehicle.\u00a0The\u00a0policy should\u00a0also\u00a0address\u00a0cell phone use and any other distracted driving\u00a0behaviors.\u00a0<\/span><\/p>\n

\u201cAll of this should be spelled out in the employee handbook or the fleet safety policy, because no what matter\u00a0what\u00a0when\u00a0someone is driving a company-owned vehicle and\u00a0is involved\u00a0in\u00a0an accident\u00a0\u2014 even if it is not on\u00a0company time \u2014 the accident would be placed on the employer\u2019s insurance policy,\u201d Long said. This means the employer\u2019s insurance and ultimately the employer would be responsible for paying for repairs, damage and penalties.\u00a0<\/span><\/p>\n

Charge\u00a0for\u00a0Personal\u00a0Use?\u00a0<\/span><\/h2>\n

There is some question about whether an employee should have to pay\u00a0in order to use a company vehicle for personal use. One reason is because the IRS says the use of a company vehicle for personal use is a fringe benefit and is taxable.\u00a0\u00a0<\/span><\/p>\n

\u201cIf you use the vehicle solely for business there is no issue,\u201d\u00a0Stueber\u00a0says. \u201cBut if you drive around on the weekend or use the car for vacation or to go to the grocery store, it will be considered a fringe benefit,\u201d\u00a0Stueber\u00a0says.\u00a0\u00a0<\/span><\/p>\n

Some fleets are setting monthly fees for personal use of company-owned vehicles.\u00a0 \u201cIt can be $100\u00a0to\u00a0$500 and is typically done as a payroll deduction,\u201d he explains. The employee gets use of a car \u2014 usually including having maintenance, gas and insurance paid for \u2014 and\u00a0the fleet gets to offset some of the cost of the car.\u00a0<\/span><\/p>\n

Tools\u00a0to\u00a0Help\u00a0<\/span><\/h2>\n

The biggest mistake most\u00a0fleet\u00a0owners make when it comes to personal use of company-owned vehicles is not paying attention to the MVRs. MVRs need to be checked when the employee first gets use of a company car, and then reviewed\u00a0at least\u00a0yearly, Long says.\u00a0<\/span><\/p>\n

Fleet\u00a0owners can purchase\u00a0programs\u00a0that monitor MVRs\u00a0on a daily\u00a0basis.\u00a0\u201cIf the employee were to get a speeding ticket and it shows up on the MVR, the program would let the employer know immediately via an email\u00a0stating that\u00a0an infraction occurred,\u201d\u00a0Long\u00a0says.\u00a0<\/span><\/p>\n

The other way\u00a0fleet\u00a0owners can protect themselves is by installing\u00a0a telematics system for the fleet.\u00a0\u201cThis allows them to monitor speed,\u00a0hard braking, hard acceleration,\u00a0and can track where the employee is,\u201d Long says. She says the employer can use the information from the GPS to\u00a0set up a reward system for drivers who are following the set guidelines.\u00a0<\/span><\/p>\n

Another option is to install\u00a0a\u00a0camera-based safety system\u00a0in the vehicles. The recorded video is an added resource to determine fault for a crash. \u201cWe can tell if it was distracted driving and also tell if it was not the employee\u2019s fault,\u201d she says.\u00a0<\/span><\/p>\n

\u201cMany employers are not spending money on\u00a0cameras, GPS or monitoring MVRs, but those things make a big difference from a safety and loss prevention perspective,\u201d\u00a0Long adds.\u00a0<\/span><\/p>\n

Fleet owners might want to consider these investments\u00a0because\u00a0recently there have been\u00a0increases in auto insurance on the commercial fleet side anywhere from 20% to 200% if a company had bad losses. \u201cIt is very important to mitigate your losses on the fleet side,\u201d\u00a0Long says.\u00a0<\/span><\/p>\n

The Flip Side\u00a0<\/span><\/h2>\n

While it is important to have policies and procedures in place for personal use of company vehicles, it is equally important to have policies and procedures for employees who use their own vehicles for company business.\u00a0<\/span><\/p>\n

\u201cThe reason this is important,\u201d Long says, \u201cis if the employee is driving his or her vehicle for the company and gets into an accident, while their insurance policy is primary, once those limits are exhausted the employer\u2019s insurance policy can be tapped.\u201d\u00a0<\/span><\/p>\n

In order to mitigate the risk, the business owner needs to make sure that they have employed safe drivers. The MVR is a good tool here and it can be used to check the driving record of potential and current employees just as it might have been used to check the driving records of employees and their family members who might be driving a company-owned car for personal use.\u00a0<\/span><\/p>\n

\u201cA lot of employers don’t understand that [the accident] can come back to them after the policy limits of the employee\u2019s personal auto policy are exhausted,\u201d Long explains.\u00a0<\/span><\/p>\n

A good way for fleet owners to protect themselves is by insisting employees who are driving their own vehicles for company use carry high liability limits on their insurance policies. Those limits should be at least $250,000\/$500,000 according to Long. \u201cThe higher the limits on the employee\u2019s insurance policy, the less liability it puts on the employer,\u201d she explains.\u00a0<\/span><\/p>\n

Top\u00a0Down\u00a0Support\u00a0<\/span><\/h2>\n

Regardless of the steps a fleet takes to mitigate risk, \u201cit is important that the rules and regulations come from the top of the company on down,\u201d Long says.\u00a0\u00a0<\/span><\/p>\n

\u201cIf the owners and managers are not on board and they are not preaching safety every day, the employees will not take it seriously. It is very important to be consistent\u00a0in\u00a0the messaging. Companies that are consistent are the companies that\u00a0are doing well from a loss reduction standpoint.\u201d\u00a0<\/span><\/p>\n

MVR Checks: What to Look for\u00a0<\/span><\/p>\n

Fleet owners should check the motor vehicle records for anyone who will be driving its vehicles. Common things to look for on a person\u2019s MVR include:\u00a0<\/span><\/p>\n