The Company Car: How an Accident Can Impact Your Business

Lizzie Weakley

February 01, 2018

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Buying a company car for you or your employees to cruise around in during the weekdays makes excellent sense. The alternative is to compensate employees for the business use of their personal vehicle. However, this may not be the most cost-effective way to handle transportation needs during workdays. After all, when you own a company car, you can control vehicle maintenance and fuel costs. You can also write off all related expenses as a deduction. However, there is always a risk that an employee could be involved in a car accident while driving the company car. Understanding how this risk could impact your business is important if you want to act knowledgeably.

The Negative Effects of a Company Car Accident

Your business is required to maintain auto insurance on the company car just as you may be required to maintain insurance on your personal vehicle. This insurance policy may cover any expenses that result from the accident, but you may be responsible for paying expenses that exceed coverage limits. In addition to the financial effects of a car accident in a company vehicle, your company may also be responsible for the damages to the employee who was driving the car. This could include medical bills, time taken off of work to recover and more. More than that, a company car accident could create bad press. Through bad press coverage of the event, sales may plummet, and your company’s reputation may be severely damaged. This is where having an attorney from a law firm like Ahlander Injury Law, a group of car accident lawyers in Las Vegas, can come in handy.

The At-Fault Entity

Some business owners think that the employee who was driving the company car at the time of the accident should be held responsible if he or she caused the accident. However, this is not usually the case. A case could be made that the company is at fault because the employee was working on behalf of the company at the time. Another way the company may be responsible for the accident is if it failed to take reasonable steps to properly maintain the car or to vet the employee. Vetting an employee may include reviewing his or her driving record to ensure that the employee is a safe driver. A car accident lawyer may represent the company to fight against claims related to the at-fault party.

The Costs of a Company Car Accident

If the employer is deemed to be responsible for the car accident in a direct or indirect way, the costs can be staggering. Initially, the employer must pay the deductible for the auto insurance policy. Any additional costs not paid for by the auto insurance policy fall on the company to pay directly out of its funds. An exception may be if a worker’s compensation claim is filed. With this type of claim, the employee’s expenses may be covered up to the limits stated in the policy. In both situations, the insurance premiums could skyrocket after the claims have been processed.

Both the employee and the other party involved in the accident could file a personal injury lawsuit in some cases. This can result in legal costs and potentially additional financial loss related to a judgment against the company. Negative press coverage may last for weeks or months, and this could create a staggering loss in sales for the company to deal with.

A company car accident is not a matter to take lightly. It may have many ramifications that affect your business in serious ways. Before you decide to purchase and use a company car, understand the risks that you could face. Always set up a protective commercial auto insurance policy, and carefully vet any drivers who you permit to drive the company car.