Lending your business’ car? Make sure it’s in good company.

Would you lend someone your company vehicle? Would you use a personal vehicle for business purposes? While you might think it’s not that big of a deal, it actually could be. If something happens to your company vehicle while being driven by someone else, or your personal vehicle while being used for business:

• Your insurance premium will be negatively affected if the person borrowing your vehicle is in an at-fault accident.
• Your claim could be denied, leaving you personally responsible for damages.

So when allowing others to drive your company vehicle (yes, even employees), make sure you answer these questions first:

• Do they have a have a proper driver’s license for the type of vehicle they’re using? (You may wish to obtain a copy for your records, but also keep in mind applicable privacy law requirements when it comes to collecting personal information)
• What will the car be used for?
• How long will they need it?
• Where will they be travelling (out of province, out of the country)?
• Who will be driving?
• How many passengers will they have?
• Will alcohol be consumed socially?

If something happens to your company car when someone else is driving it, your insurance may be affected as well – you’re essentially lending your insurance when you lend your vehicle. If the person who drives your car is involved in an at-fault accident, the claim goes through your policy and affects your rates. As the vehicle’s owner, you can also be responsible for covering the damage costs if your policy limits aren’t high enough.

Also keep in mind that first or third party coverage may be affected if the driver does something that violates your insurance policy and gets involved in an accident. You could then be implicated in the third party insurer’s recovery attempt as they’ll sue both the driver and vehicle owner. Your insurance coverage won’t respond to the loss as a result of the violation so you and the driver will have pay for your own legal counsel may need to compensate the third party as well. Your coverage may be similarly affected, and the same scenario may play out if you use your personal vehicle for business purposes when you have indicated that you only use it for personal purposes.

Keep these other factors in mind as well when lending your vehicle:

• There should only be as many people in the vehicle as there are seatbelts.
• See if there are any restrictions on the license of the person you’re lending the vehicle to. Younger drivers especially may still be in some stage of their Graduated Driver License which places restrictions on their driving status.
• Giving someone keys to your company vehicle gives them consent to drive it – even if there was no written or verbal agreement.
• Vehicles with company logos can be great advertising but may also be detrimental to your business’ image if the car is used irresponsibly or gets in an accident.

There’s no way of knowing what’ll happen when you lend your company vehicle to somebody else, or use your own car for business purposes. However by doing your due diligence, you can better decide what to do with your personal or company car.