We are entering the final weeks of 2017, but it’s not too late to tweak your existing car allowance policy. A few minor adjustments can help protect your company from the unforeseen risks that await in 2018.
Your goal needs to be a professional car allowance policy that takes a proactive approach to risk mitigation. Here are three steps to help you on your way.
- Verify your employees’ vehicle insurance.
Insurance premiums are likely to increase in 2018. Why? The weather. After Hurricanes Harvey and Irma, the Denver hailstorms, and the California wildfires, insurance companies took a multi-billion dollar hit in 2017. Insurance is pooled so that the cost of claims is spread across the country. Consequently, while the states directly impacted by weather related claims will experience the most significant increases; widespread increases are likely as well.
As 2018 premiums increase, many people will take cost cutting measures. These measures could come in the form of reducing insurance coverage to state minimums or eliminating comprehensive or collision insurance on older vehicles.
If your employees reduce their insurance coverage, they will expose your business to a high level of risk. Remember, if an insufficiently covered employee causes an accident during work hours, it will surely bring your company into a lawsuit that could have been avoidable. It is imperative that you establish reasonable car insurance minimums for your organization’s mobile employees and spend time to verifying each employee’s car insurance coverage.
- Ensure that your car allowance/reimbursement fully covers employee costs.
Employees will be more inclined to reduce their insurance coverage if their car allowance or mileage reimbursement does not cover their costs. The economy is relatively stable, but the cost of owning and operating vehicles continues to rise.
In addition to fuel costs, maintenance costs, and taxes, insurance rates constitute a significant portion of the cost of vehicle ownership. If your employees drive their personal vehicles to conduct work for your company, you owe it both to them and to your company to ensure that they can afford sufficient insurance coverage. Adjust your car allowance or mileage reimbursement rates to ensure these insurance cost increases translate into an increase in for employees.
- Run motor vehicle record checks.
Lastly, make sure you run an annual motor vehicle record check. Many organizations overlook the importance of motor vehicle record checks.
Every organization runs MVR as part of the employee screening or new hire process, but many fail to follow up with annual checks. Unfortunately, driving records change throughout the year, especially if you have mobile employees that drive a lot for business. It’s best to avoid any potential negligent entrustment issues by making sure you are the first to know that an employee might be a challenged driver.
After identifying the challenged drivers and making sure they are not violating your driving policy, you should take steps to improve them as drivers. Driver improvement might take the form of either online driving modules addressing their deficiencies or behind-the-wheel training. Taking a proactive approach will help you in the event of any unforeseen issues.
Of course, there are many other steps to creating a professional vehicle reimbursement policy, but these three steps will deliver a solid tune-up for 2018.