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Insurance: the potential traps of company cars

Insurance: the potential traps of company cars
By John Grant Having a company car can be a great benefit, one that adds to your overall remuneration package. But while it can be worth a lot to you, be aware it could also harbour some potential traps if you are unwary. Firstly, the car is someone else's asset; possibly of your employer but more likely it is leased from and owned by a fleet management or financing company. Your employer most likely provided you with a set of Rules covering things like; when you are allowed to use the vehicle; using the car for private purposes; who is allowed to drive it; and the like. Being in charge of an expensive asset that is owned by someone else can bring with it some traps. Importantly your employer (or the leasing company) may have a policy on having limited or no insurance cover on their vehicles. Many larger companies have limited the insurance cover and in some instances companies carry no insurance - they are effectively self insuring. Therefore, if you are responsible for a car, and while it is in your care it is damaged or it causes damage to other property, then you are ultimately responsible. Now mostly this will be dealt with by your employer, but largely you are relying on their goodwill to indemnify you. The good news is that if you own your own vehicle (separate from the company car) and that other vehicle is properly insured, then you may well have cover for damage you do to other property while driving any vehicle not owned by you; this is likely to be included in the liability section of your own insurance policy. But, this probably won't help you if the company car is parked in the garage and through your negligence the garage burns down, company car and all. (However you may well be able to claim under the liability section of your House insurance cover.) Probably the greatest risk you run with a company car is what happens if you invalidate the insurance cover by driving, for example, while under the influence of drugs or alcohol. Here you are probably in no different a situation to what you would be if you were driving your own privately owned car. The big difference is the fact the employer (or the actual of owner of the car) will come chasing you for reimbursement of any losses. Tips for those with a  company car
  1. Make sure you have a clear written agreement about your rights and obligations;
  2. Make sure that insurance exists and that you are not responsible for damage - get it in writing;
  3. Make sure your House policy includes cover for liability while the company car is parked in your garage or on your property;
  4. If necessary take out your own insurance cover, at least for third party or select a policy on the second family car that extends to cover you for driving other vehicles not owned by you;
  5. If the option exists, take the money in place of the leased car and supply your own vehicle. This will avoid all risk ambiguity.
Have you had a brush with insurance issues related to your company car? We would love to hear of your experience ...

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