• Lending company cars comes with several risks, such as financial liability, legal issues, and potential reputational damage.
• Before lending a company car to an employee, conduct a thorough background check and have them sign a contract.
• Purchase comprehensive insurance coverage to protect your business from financial losses due to a company car accident.
• Regular maintenance should be done on all vehicles, and security and tracking measures should be installed to monitor usage.
• Having company cars can increase productivity, provide employees with needed mobility, and boost the visibility of your business.
As a business owner or entrepreneur, you may be considering lending company cars to your employees. Doing so can provide them with the freedom to commute and travel for work-related reasons, but it also presents a number of risks that must be weighed carefully. Here’s a look at everything you need to know about this move.
The Risks Involved in Lending Company Cars
Lending company cars comes with several inherent risks. It’s not a simple decision that can be made lightly because you’re essentially putting a significant financial asset in the hands of an employee who may not have the same level of responsibility or commitment to your business as you do.
Here are just some of the risks you should take note of:
- Financial Risk: If an employee gets into an accident while driving a company car, the business owner is liable for any costs associated with repairs and medical bills.
- Legal Risk: If an employee uses the company car for personal use, they may not be covered by your insurance policy in the event of an accident.
- Reputational Damage: If something happens while an employee is driving a company car ― such as public intoxication or reckless driving ― it reflects poorly on your business and can have long-term implications for your brand image.
For this reason, it’s crucial to have a clearly written policy for company car use that spells out expectations, consequences, and protocols for employees to adhere to.
What You Need to Consider Before Lending Company Cars
Aside from weighing the inevitable risks, before you decide to lend out company cars, there are several things you should consider doing first. Here’s an overview that should help you with the decision:
1. Make sure all drivers are properly licensed.
This is the first and most important step in preparing to lend company cars. You need to conduct a thorough background check of all drivers, including reviewing their driving records for any red flags or violations.
2. Make the drivers sign a contract.
3. Purchase the right insurance policy.
You’ll want to ensure you have a comprehensive insurance policy that covers liability and collision damage in the event of an accident. Shop around for the best rates and coverage since this is essential to protecting your business from financial losses due to company car usage.
4. Do regular maintenance.
It’s important to make sure that any company cars you lend out are kept in good condition. Regular maintenance, such as oil changes and tire rotations, will help keep the vehicles safe and running smoothly.
5. Install security and tracking measures on the vehicles.
An excellent way to keep an eye on your company cars is to install an efficient Trax GPS device that allows you to track the vehicle’s location in real-time. It will also provide valuable information about the driver’s speed, mileage, and other driving habits.
Benefits of Having Company Cars
Having considered everything, it’s undeniable that company cars can be a great way to provide your employees with the mobility they need for work-related purposes. It gives them the freedom to travel and commute while also allowing you to monitor their usage and keep track of their whereabouts.
In addition, having company cars is an effective way to increase productivity by allowing your team members to get to meetings and other engagements in a timely manner. For example, a sales team may benefit from having company cars to make visits to potential clients.
Finally, from a marketing standpoint, having company cars can boost your visibility and help spread awareness of your business or brand. This is because the vehicles are often marked with your logo and other identifying information, which provides a great opportunity for increased brand exposure.
Lending out company cars can be beneficial to your business in many ways. However, it’s important to weigh all the risks involved before deciding to lend out vehicles to employees. Make sure all drivers are properly licensed and insured before allowing them access to a car, create transparent guidelines outlining when and how employees can use them, require drivers to sign contracts agreeing to follow specific rules while operating these vehicles, and ensure that you have sufficient liability insurance coverage in case of any accidents involving your vehicles. Taking these steps will help ensure that your employees and your business remain safe when using company cars.