Whether you run a single van or a fleet of hundreds, a company vehicle policy is one of the most important documents your business can have. Also known as a driver policy or company car policy, it sets out the rules, expectations, and procedures that govern how employees use your vehicles. It also protects your assets, your drivers, and your business if something goes wrong.
In this guide, we explain why a company vehicle policy matters, walk you through everything to include in yours, and give you a free company vehicle policy template you can copy and adapt straight away.
Why A Company Vehicle Policy Is Important
A company vehicle policy (or CVP for short) is a set of rules, guidelines, and procedures that govern how employees use the cars, trucks, and vans in your commercial fleet.
Many first-time owners wonder, though, “Why do we need such a policy?” and, “Why are these guidelines so important?” Read on for the answers.
Protects Your Assets
You invest a lot in your fleet vehicles, and you want those assets in service for a long time. Implementing a CVP that encourages safe driving habits helps preserve both the appearance and the mechanical integrity of all your rolling stock.
Protects Your Drivers
A comprehensive company vehicle policy also protects the drivers who get behind the wheel every day. A dent, ding, or mechanical damage to a work truck can be fixed. But an injury of any kind to the driver can last a lifetime.
Enforcing the CVP helps reduce the risks associated with piloting a vehicle and helps prevent the types of injuries that can dramatically affect a person’s life.
Protects Your Business
Regardless of the CVP you put in place, accidents will likely occur. That’s just the nature of driving these days.
But negligence on the part of your business can make what happens after accidents much worse.
Without a company vehicle policy, damages, legal costs, and medical liability can skyrocket to the point that bankruptcy is the only option.
Protect your business — and everyone who works for you — by creating a CVP of your very own and training your employees to abide by it.
A note on legal liability:
When an employee causes an accident in a company vehicle, your business can be held legally responsible for the resulting injuries, damages, and legal costs on top of the vehicle costs.
This is known as vicarious liability, and it applies even when the incident happens outside of normal working hours if the vehicle was available for personal use.
More seriously, if your business can be shown to have knowingly allowed an unqualified, unsafe, or impaired driver behind the wheel, you may face a claim of negligent entrustment which is a legal doctrine that holds employers accountable for foreseeable harm caused by drivers they should not have authorised.
A well-documented company vehicle policy, combined with proper driver eligibility checks and a signed vehicle use agreement, is your primary defence against both. It demonstrates that your business took reasonable steps to vet its drivers and enforce safe driving standards.
Pays Cultural Dividends
A strong company vehicle policy can even pay cultural dividends for everyone involved.
When your employees follow the rules and your business expresses concern for everyone’s safety, it creates a sense of camaraderie and strong bonds that results in happier team members and better work overall.
What To Include In A Company Vehicle Policy: Legal
CVP Overview
Every company vehicle policy should start with an overview that outlines the basics of the document, including:
- What qualifies as a company vehicle
- To whom the policy applies
- When the policy is in force
- Where the policy is in force
The overview may even mention — but not go into detail on — the other parts of the CVP discussed below.
Driver Eligibility
A big part of any CVP is the section on driver eligibility.
There, your business can describe the process for gaining permission to drive a company vehicle, including steps such as:
- Fill out the requisite paperwork
- Submit a copy of a driver’s license
- Allow the business to check your driving record
Be sure to include language that gives your business the right to assign and revoke access to company vehicles at its discretion and at any time.
Acceptable Use
A good CVP will also define acceptable use for each car, truck, SUV, and semi in the fleet. No two businesses are the same, so the way you define acceptable use may not be the same as someone else defines it. If you base your CVP on a template of some kind, be sure to alter the use section so that it fits the way your business operates.
A key part of any acceptable use policy is defining whether personal use of company vehicles is permitted — and if so, to what extent. Some businesses allow employees to commute to and from work or run errands outside of hours as an employment benefit; others restrict vehicles strictly to business purposes. Either approach is valid, but it must be stated explicitly rather than left to assumption.
If personal use is permitted, your policy should address: whether family members or other individuals may drive the vehicle, any geographic restrictions on where the vehicle can be taken, and what happens if an incident occurs during personal use.
A note on tax implications:
Personal use of a company vehicle is treated as a taxable fringe benefit by the IRS. The value of that benefit must be included in the employee’s gross income and is subject to federal income tax, Social Security, and Medicare withholding.
The IRS offers several methods for calculating the taxable value, including the annual lease value method and the cents-per-mile method. Your company accountant or payroll provider can advise on which applies.
Requiring employees to log personal mileage separately from business mileage makes this calculation significantly easier and reduces your exposure in the event of an audit.
Company Responsibilities
Another important section of a CVP is the responsibilities that your business accepts when it fields a fleet of commercial vehicles.
These often include:
- Providing insurance
- Registering the vehicles
- Scheduling regular maintenance
- Ensuring business vehicles are safe
- Acquiring/retiring vehicles as needed
It’s also a good idea to include language that indicates what the business is not responsible for, including, for example, paying fines that drivers receive and posting bail for drivers who are arrested while driving company vehicles.
Penalty For Violation
Every company vehicle policy needs to, at least, mention the penalty for violation of said guidelines.
Most often, this is a revocation of the employee’s right to drive fleet assets but may also include fines and other sanctions if the violation is serious enough.
What To Include In A Company Vehicle Policy: Procedural
Accident Procedures
In this section of your CVP, set clear protocols that all employees must abide by should an accident occur.
This usually involves contacting the employee’s immediate supervisor and what documentation to provide to authorities upon request. You may also define who covers any damages, fines, and legal costs that result from the accident.
Rules
The rules for employees driving company vehicles should be clearly documented, communicated during onboarding, and revisited regularly to reflect any changes in law or business operations. Here are ten set rules to follow.
1) Conduct Pre-Trip And Post-Trip Inspections
The Department of Transportation (DOT) requires that all fleet drivers conduct a pre-trip inspection before getting underway.
For vehicles operating across state lines, the Federal Motor Carrier Safety Administration (FMCSA) sets additional requirements around hours of service, vehicle maintenance records, and driver qualifications.
State-level laws for driving a company vehicle vary, so it’s worth confirming local requirements apply to your fleet, particularly around:
- weight limits
- licensing classes
- and road worthiness standards
Post-trip inspections aren’t required by law but are a good idea for tracking damage and wear and tear on company vehicles.
2) Obey All Laws
Including a section that makes it plain that drivers must obey all laws helps protect them and the business — both physically and legally — should an accident occur.
Among other things, this part of your CVP can mention:
- Observing the posted seat belt
- Wearing a seat belt at all times
- Obeying all traffic signs and stop lights
This section is also a good place to outline the penalties for breaking the law while in a company vehicle.
3) Document Driving Expenses
Fleet vehicles that travel across state lines and into Canada must abide by the International Fuel Tax Agreement (IFTA).
Remaining in compliance means tracking fuel expenses along the way so that fleet managers can forward the necessary funds to the proper authorities.
If your business also agrees to pay for other trip expenses — food, lodging, supplies, and repairs — make sure that drivers understand that they need to document these purchases and provide receipts.
4) Track Mileage
Sometimes, tracking mileage is included as part of the pre-trip and post-trip inspections. If it’s not, and your business needs these numbers, set up a process that drivers can use to record the beginning and ending mileage of their trip.
The simplest option is a paper form or record book that stays in each vehicle, although other options include mileage-tracking apps and data from telematics.
5) Monitor Systems While Underway
Another good rule to include in your CVP is one that requires drivers to monitor systems while underway.
Most drivers will pay attention to fuel levels while they’re on the road, but encourage them to also check fluid levels — e.g., oil, transmission, and windshield wiper — as well as tire pressure once or twice throughout the work day.
Doing so can prevent a small problem from becoming a big (and expensive) issue.
6) Report Damage Immediately
Make it mandatory that all drivers report damage to the home office immediately.
Most minor cosmetic damage from regular use gets reported on the pre-trip and post-trip inspections, but if a driver notices that the vehicle has been scratched while parked in a parking lot, for example, they should contact their manager to report it.
Establishing such a procedure in your CVP makes it easier to track driver behavior and stay on top of maintenance and repair issues.
7) Do Not Drive While Impaired
This rule should be as specific as possible and include language that refers to all types of impairment, including those caused by:
- Illicit drug use
- Alcohol use
- Prescription drug use
- Fatigue
Also, establish the penalties inherent in breaking this part of the CVP.
8) Do Not Use A Phone While Driving
The dangers of texting and talking on the phone are well-established. Ohio has even gone so far as to make initiating phone calls and answering texts illegal while a vehicle is in motion.
Include a rule that explicitly prohibits drivers from using their cell phone while operating fleet vehicles.
9) Do Not Smoke In Any Company Vehicle
Smoking while driving can be just as dangerous as using a cell phone. In addition, the smoke can permeate the cab and seriously reduce the resale value of the vehicle.
Make it clear that smoking in company vehicles is strictly prohibited.
10) Do Not Allow Unauthorized Drivers To Use Company Vehicles
Most CVPs and insurance policies only cover drivers that are employed by the business.
If an unauthorized driver hops behind the wheel — except in certain emergencies — it can pose serious legal risks.
Company Vehicle Use Agreement
A company vehicle policy sets out the rules. A vehicle use agreement is how you confirm that each employee has read, understood, and accepted them. The two documents work together. The policy is your business’s framework while the agreement is the individual sign-off that makes it enforceable.
Having employees sign a vehicle use agreement before they get behind the wheel of a company vehicle serves two purposes.
- It creates a paper trail that demonstrates your business took reasonable steps to inform drivers of their responsibilities — which matters significantly if a liability claim ever arises.
- It gives employees a clear record of what they agreed to, reducing the chance of disputes over what was or wasn’t communicated.
Your vehicle use agreement doesn’t need to be complicated. It should reference the full company vehicle policy, confirm the employee has received and read it, and capture a few key details about the driver and the vehicle they’re authorised to use.
Sample company vehicle use agreement
This agreement should be signed before an employee is granted access to any company vehicle. Retain a copy in the employee’s personnel file.
Company Vehicle Use Agreement
Employee name:
Job title:
Driver’s licence number:
Licence state:
Licence expiry date:
Vehicle make and model:
Vehicle registration/plate number:
Date of authorisation:
I confirm that I have received, read, and understood the [Company Name] Company Vehicle Policy. I agree to comply with all rules, procedures, and conditions set out in that policy, including but not limited to:
- Operating the vehicle safely and in accordance with all applicable traffic laws
- Conducting pre-trip and post-trip inspections as required
- Reporting any accidents, damage, or incidents to my manager immediately
- Not operating the vehicle while impaired by alcohol, drugs, or fatigue
- Not permitting unauthorised individuals to operate the vehicle
- Accurately logging all mileage, including personal use where applicable
I understand that failure to comply with the company vehicle policy may result in revocation of my vehicle privileges and further disciplinary action.
Employee signature: _____________________ Date: ___________
Manager signature: _____________________ Date: ___________
Here’s the full template, ready to paste in:
Company Vehicle Policy Template
Copy and adapt the template below to fit your business. Replace all instances of [Company Name], [Date], and any bracketed fields with your own information.
[Company Name] Company Vehicle Policy
Effective date: [Date] Last reviewed: [Date]
- Overview
This policy sets out the rules and procedures governing the use of company vehicles by employees of [Company Name]. It applies to all employees who drive a company-owned, leased, or rented vehicle for business purposes, whether occasionally or as a regular part of their role.
This policy is in effect whenever an employee is operating a company vehicle, regardless of the time of day or whether the trip is for business or permitted personal use.
- Driver eligibility
To be authorised to drive a company vehicle, employees must:
- Hold a valid driver’s licence appropriate for the vehicle type
- Submit a copy of their licence to [HR/Fleet Manager] before driving any company vehicle
- Consent to a driving record check at the point of authorisation and periodically thereafter
- Report any changes to their licence status — including points, suspensions, or revocations — to their manager immediately
[Company Name] reserves the right to grant, suspend, or revoke driving authorisation at any time and at its sole discretion.
- Acceptable use
Company vehicles are provided for business use. [Select one: Personal use is not permitted / Limited personal use, including commuting, is permitted as set out below.]
Personal use: [If permitted] Employees may use company vehicles for personal trips subject to the following conditions: [list conditions, e.g. geographic limits, no unauthorised drivers, mileage logging required]. Personal use of a company vehicle is a taxable fringe benefit under IRS rules and will be reflected in the employee’s taxable compensation.
Vehicles may not be used for any illegal activity, commercial purposes outside of [Company Name] business, or by any individual not authorised under this policy.
- Company responsibilities
[Company Name] is responsible for:
- Maintaining appropriate insurance coverage on all company vehicles
- Ensuring vehicles are registered and roadworthy
- Scheduling and funding regular maintenance and inspections
- Replacing or retiring vehicles as appropriate
[Company Name] is not responsible for fines, penalties, or legal costs incurred by the driver as a result of traffic violations or unlawful conduct while operating a company vehicle.
- Rules for driving company vehicles
All employees authorised to drive a company vehicle must:
- Conduct a pre-trip inspection before every journey and report any defects immediately
- Obey all traffic laws, including speed limits, seat belt requirements, and traffic signals
- Never operate a vehicle while impaired by alcohol, prescription drugs, recreational drugs, or fatigue
- Never use a handheld mobile device while driving
- Never smoke in a company vehicle
- Never permit an unauthorised person to operate a company vehicle
- Report all accidents, incidents, or damage to their manager as soon as it is safe to do so
- Track and record mileage accurately, including distinguishing business from personal use
- Accident procedures
In the event of an accident, the driver must:
- Ensure the safety of all parties and call emergency services if required
- Not admit fault or liability at the scene
- Exchange insurance and contact details with any other parties involved
- Document the scene with photographs where it is safe to do so
- Notify their manager as soon as possible and no later than [X hours] after the incident
- Complete an incident report form and submit it to [HR/Fleet Manager] within [X days]
- Violations and penalties
Failure to comply with this policy may result in:
- Immediate suspension of driving privileges
- Disciplinary action up to and including termination of employment
- Personal liability for costs arising from incidents caused by policy violations
- Policy review
This policy will be reviewed annually or following any significant incident or change in legislation. Employees will be notified of any material changes.
By signing the accompanying vehicle use agreement, employees confirm they have read and understood this policy in full.
Help For Fleet And Fuel Management
One of the best ways to enhance your company vehicle policy — and reduce business expenses in the process — is to include fuel management procedures as part of your driver training.
The Coast fleet and fuel card can help.
With a Coast card, you can set policies that help streamline fuel management procedures. Coast also provides real-time expense tracking and a powerful online management platform that puts your entire fleet in the palm of your hand and provides full visibility of every dollar spent.
For more information, visit CoastPay.com today.
