What is a company car policy?

A company vehicle policy, or a company car policy, is an agreement between the company and its employees that provides a guideline for using company cars. 

This policy must cover the rules for eligibility, conduct, and possible penalties for an employee using a company vehicle, as well as outlining the steps the employee should take in the event of a serious situation, such as in an accident.

Qualifying

Outline here what factors are necessary in order to permit an employee to use a company car, as well as anything that would prevent them from being allowed to use one. 

In general, the employee's work must entail frequent travel in order for them to qualify for a company car.

Common qualifiers include:

• If the employee has to drive daily for business purposes.
• If the employee drives certain miles per year in order to meet the company’s needs.
• If they've negotiated for a vehicle as a perk of their contract.

Prerequisites include:

• A valid driver’s license.
• No recent record of unsafe driving, such as being at fault in an accident or violating vehicle and traffic laws within a number of years.

Getting the car

This part of the policy should dictate the process employees go through in order to be provided a company car. This is typically handled in a company by the Human Resources (HR) department.

The standard process includes:

• Submitting the request to HR.
• Providing a copy of a valid driver’s license.
• Providing proof of a clean driving record. This usually comes in the form of a Motor Vehicle Record (MVR), and is accessible at the DMV.

Disability considerations

Employees with disabilities should not be disqualified from using a company car without proper consideration. Many people with disabilities are able and permitted to drive, so special considerations should be afforded by the company for such employees. 

Conduct rules for using the company vehicle

This section of the policy should outline the company rules that employees need to be aware of and follow when using a company car. 

Law

It should be made clear that local laws regarding driving and the vehicle are to be followed at all times by the employee.

Safety

Safety considerations should be held as top priority—along with following local law. Safe driving rules must always be followed by the employee. These considerations include:

• Vehicle security, such as locking the door when left alone.
• Driving courteously in regards to other drivers.
• Ensuring the driver and any passengers are wearing seat belts.
• Not using their cell phone or other devices that could become a distraction while driving.
• Driving safely, which includes driving only while not under the influence of alcohol or drugs, overly fatigued, or on medication that affects their ability to drive safely.

Appropriate vehicle use

This section should cover the scope of when an employee is permitted to use the vehicle. This is a company decision that factors in necessity of travel, availability of other options, costs, environmental concerns, and more.

One important decision to make is whether to allow the vehicle to be used for personal use outside of working hours, to allow it for commuting between work and home, or to restrict it to only for business use. Though, personal use of a company vehicle is generally accepted as the standard practice in most cases.

Regardless, it should also be made clear that the vehicle may only be used by the employee, and not sold, lent, or rented out to another driver, even other family members, unless required by an emergency.

Vehicle maintenance

The maintenance of the vehicle becomes the responsibility of the employee when given as a company vehicle. The main responsibility for the company in this regard is scheduling appointments for vehicle maintenance. For the employee, the responsibilities include:

• Monitoring tire pressure, brake fluid, and gas.
• Keeping the vehicle clean and avoiding smoking while inside.
• Ensuring the vehicle is brought to scheduled maintenance appointments, booked by the employing company.
• Promptly reporting property damage dealt to the vehicle. 

Other considerations

There are other considerations that don’t fit into the above sections, listed below. There are also sure to be additional aspects to consider for companies using company vehicles for uncommon purposes.

With that said, the following may also be added to the policy:

• Any changes to the driver’s legal ability must be immediately reported, such as having their license suspended.
• Modifications should not be made to the vehicle without the company’s prior consent.

Disciplinary actions

It should be made explicitly clear what disciplinary actions will happen should an employee use the vehicle in a way that breaks the rules outlined in this policy. A range of actions should be clarified, ranging from a verbal warning and retraction of company car privileges to termination and legal action. Though, it’s not necessary to outline what actions will lead to each disciplinary action. This allows the Human Resources department, the business owner, and other decision makers to use their discretion while choosing how to respond to an incident.

Accidents

It’s essential for this policy to outline the steps to take should a car accident take place. The absolute priorities in the event of an accident are ensuring the safety of everyone involved and complying with local laws.

The steps that should be present in this policy should include:

• Contacting the HR department, so that they are made aware of the situation and can contact the insurance company on behalf of the employee.
• Exchanging contact information with the other driver, and anyone else involved in the incident.
• Reporting the accident to the local police, if necessary.
• Not taking further action in the moment, such as agreeing on a payment with the other driver, or accepting responsibility for the accident.

Company responsibilities

Clarify what the company’s responsibilities are in regards to the company vehicle. These responsibilities commonly include:

• Providing a vehicle that is safe to drive, and replacing the vehicle should the original not be deemed safe or appropriate to drive.
• Scheduling frequent appointments for vehicle maintenance.
• Handling car insurance, including contact with the insurance provider and making the insurance policy accessible for employees.
• Ensuring there is someone available for contact during the hours in which an employee is driving during work hours. A phone number for this purpose should be shared with employees.

On the other hand, the company should not be responsible for:

• Paying the financial repercussions of the employee’s actions, such as fines the employee is given while driving the vehicle, fines from traffic violations, or bail to release them from jail.