Are Your 'Grey Fleet' Drivers Correctly Insured?
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. In this blog post we'll take you through all things related to insurance and making sure your employees that drive for work are correctly insured.
For other Grey Fleet related content, read another Grey Fleet blog:
- 10 Things You Need to Know About... Grey Fleet Management
- Driving for Work Part One (Who's Driving?)
Please note: This blog post was updated 2nd July 2018 with comments from Laura Newton, Transport Solicitor at Law Firm Rothera Sharp.
Insurance - Points to Consider
“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.”
- Laura Newton, Transport Solicitor at Rothera Sharp
Let's Break it Down
ANY vehicle that is used for business purposes is subject to the company's Duty of Care, whether the vehicle is used for a trip to the bank once a month or a delivery van that's driven for the company every day.
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 and therefore would not cover the employee for using their vehicle during working hours.
It's definitely worth checking whether an employee is covered for vehicle use during work hours... Below are some examples of what is actually classed as 'driving for work':
- 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 the usual commute, the driver will need business class insurance.
What types of cover are available?
There are three basic kinds of business cover;
- Class 1 - Extended cover for the private individual
- Class 2 - Cover for named drivers
- 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.