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Business Auto Policy Considerations

The following are general guidelines to be considered when establishing a corporate auto policy. These comments are meant for use as a reference only. All policies should be reviewed by corporate counsel prior to implementation. Please discuss any questions or concerns regarding your particular policy with your, Parker, Smith & Feek Account Advisor.

Establish a Fleet Safety Policy
A fleet safety policy should be written and widely distributed throughout the organization. The policy should: Communicate management’s support and reflects the company’s vision, values, and mission and it should be simple and explicit.

Establishing Hiring Criteria and Screening Drivers
Check Motor Vehicle Records (MVRs) on all employees that drive company vehicles upon hiring and annually thereafter. For employees that drive their own vehicle for company business, checking their MVRs is at your discretion. However, if you have a driver routinely driving their car for your business and especially if you provide a car allowance or other stipend and you do not check their MVR you could be exposed to a lawsuit alleging ”Negligent Entrustment”. Review the MVR with the driver when needed. Verify the MVR meets the standards established.

The following overall corporate standards are recommended:

  • No individual MVRs with a major conviction
  • No new driver will be hired with a ”borderline” or ”poor” MVR
  • Only employees over 21 years of age will be allowed to drive company vehicles.

The following is a guideline in helping to determine status of drivers:






Any major violation is automatically ”poor”. The company should determine disciplinary action against existing employees that develop a ”Borderline” or ”Poor” MVR. ”Borderline” drivers should be monitored more frequently and ”Poor” drivers should have at a minimum their driving privileges revoked. Both Borderline and Poor drivers could improve their level by completing a certified driver training program e.g. Evergreen Safety Council’s ”EverSafe Driving Program”, Defensive Driving School (Seattle Area), Professional Truck Driver Institute (PTDI) course, etc..

The following are examples of Minor and Major Violations:
Speeding, U-Turn, etc., and any violation other than major including:

  • Motor vehicle equipment, load or size requirement
  • Improper/failure to display license plates
  • Failure to sign or display registration
  • Failure to have driver’s license in possession


  • Driving under influence (DUI)
  • Failure to stop/report an accident
  • Reckless driving/speed contest
  • Driving while impaired
  • Making a false accident report
  • Homicide, manslaughter, or assault arising from the use of a vehicle
  • Driving while license is suspended/revoked
  • Careless driving
  • Attempting to elude a police officer
  • Deferred prosecution (will only show up on a five-year abstract report in Washington)

Personal Use Policy For Corporate Vehicles
No personal use of company vehicles is the best policy. The vehicle should be used for going to and from work and during work hours on company business.

No spouse or family member is authorized to use the vehicle. This is sometimes modified for executive level company vehicles where the spouse is allowed to drive, however, the spouse should be screened like any other driver. Insurance companies will resist children driving the vehicle.

You may leave yourself some discretion by requiring an employee to notify management if the employee might need to use the vehicle for various reasons. This can be hard to monitor and may expose the company to claims of not treating employees equally.

Non-Owned Vehicle Controls
This exposure exists when employees use their own vehicles for company business. All company rules and policies should apply equally to these drivers.

The driver should also:

  • Be required to maintain adequate limits of personal insurance. (Limits should be set by the corporation. (Most Insurance Companies ask for a minimum of $300,000 Combined Single limits. This can be discussed further with the Account Advisor.)
  • Provide you with Certificates of Insurance or a copy of their declarations page and drivers should be required to notify you if the policy is canceled for any reason.
  • Be financially responsible for the deductible on their (the employee’s) policy.
  • Have evidence that the vehicle is properly maintained and in good operating condition.

Driver Rules
In addition to following the rules and laws of the road, additional driver rules could include:

  • Immediately notifying the designated Risk Manager of driving violations while on company or personal time.
  • Immediate notification to the designated Risk Manager of any accident.
  • Require the driver to fill out an accident report at the scene and get specific information regarding the location of the incident and other drivers involved.
  • The employee is responsible for paying any traffic violation fines and/or tickets.
  • The employee is responsible for maintaining the vehicle in safe working condition by having regular maintenance done as required on the vehicle.
  • No unauthorized passengers allowed in the vehicle.
  • No drug or alcohol use while operating any vehicles.
  • All vehicles must pass inspection requirements, and it is the responsibility of the employee to confirm the vehicle has passed.
  • Any employee that has not been screened/authorized to use a company vehicle is not allowed to drive the vehicle.
  • Employees and passengers should be required to wear a seatbelt.
  • Specific restrictions on personal use of company vehicles.
  • Consider developing a distracted driving policy. This could encompass prohibiting the use of portable devices and any activity that could cause a driver to take hands off the wheel or their mind off of driving responsibilities.

Driver Training
A driver’s license does not mean a person knows how to drive safely. It means they have passed minimum requirements established by the State.

Your Parker, Smith & Feek’s Account Advisor would be happy to discuss further training or to address specific problems if your safety committee agrees that this is a valuable service.

Disciplinary Action
A disciplinary action may vary from a probationary period to loss of driving privileges to termination, depending on the individual’s driving and employment records. All such actions should be taken into consideration.

Written Maintenance Program
A written maintenance program should exist to ensure the fleet vehicles are properly maintained and in good working order. The procedures should meet the manufacturer’s specifications at a minimum. All inspections and maintenance should be documented.

Parker, Smith & Feek Risk Management Center
Please be sure to visit the opens in a new windowRisk Management Center (RMC) to access valuable information regarding sample fleet safety policies, driver training and much more. The RMC is available via within the DigitaLINK portal and is a resource provided at no cost to PS&F clients.

The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.

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