With the proliferation of online insurance, extending private vehicle cover to include business travel should be a painless process for grey fleet drivers.

However, many insurance administrators do not understand the details of their own policies, leaving employees and fleet managers confused over the nature of business cover and baffled by complex documentation.   

 
Employees using their own cars for business use open up a whole range of issues for fleet managers: Is their vehicle safe? Do they know how to check it for problems? When was the last time it had a service or MoT?

One thing that a grey fleet driver must have before going anywhere is business insurance and fleet managers have a duty of care, under the Health and Safety at Work Act 1974, to ensure their drivers have the correct form of cover.

However, a large number of drivers don’t and employers aren’t helping.

More than half of fleet managers fail to check insurance details as standard, according to research from Arval (Fleet News, October 25).

But insurance is not only a health and safety issue for fleet managers. Uninsured grey fleet drivers having an accident while on business are likely to find that they are not eligible for compensation.  

“If you don’t tell your insurer that you’re using your car for business you may find that they won’t pay out,” says Malcolm Tarling from the Association of British Insurers.

Getting the right cover appears to be easier than ever. Business drivers can simply go online to add business use to an existing private policy, often at no additional cost.

There are three basic kinds of business cover: Class 1, (extended cover for the private individual), Class 2 (cover for named drivers) and Class 3 (cover for commercial sales-people).

he majority of grey fleet drivers will require Class 1 business insurance as an extension of their normal policy.

But insurers have different classifications for the separate types of business insurance – not every insurer calls them Class 1, Class 2, etc, so drivers need to make sure they specify the exact cover they want.

Many insurers extend cover for free. However, driver circumstances – occupation, mileage, vehicle specification, location, etc – can make a difference.

Some companies add business cover for around £10-20. 
 

After the driver has acquired the correct level of cover it is then up to the fleet manager to check their certificate of insurance before allowing them to drive on business.

Getting it right

Louise Claydon, fleet manager at CGG Veritas, helps her drivers pick their cover.

She has found that some high street insurers struggle to underwrite policies because they are unfamiliar with the definitions of business cover and the number of variables that can be applied to company car drivers.

“It’s definitely easier dealing with company cars as insurers know what cover we need to have,” she says.

“It would certainly be easier from a fleet management and safety perspective if our grey fleet drivers were under the provision of the company car scheme.”

Checking a driver’s certificate of insurance is not always straightforward, as many fail to list the type of business cover held in any detail and fleet managers then have to examine complicated schedules of insurance for confirmation of the policy.

David Dippie, ACFO London West chairman and managing director of Ashbrooke Fleet Management, advises fleet managers to speak directly to the driver’s insurer because certificates and schedules are often difficult to understand.

He says: “It’s hard for fleet managers to find out whether their employees have cover and often the insurer is not aware of the particular policy that they have given to the customer.

“I think fleets are exposed in thinking they can get business cover easily.”

Andrew Wallis, of Balgrove Fleet Insurance, has also experienced problems getting companies to define their cover.

Insurers use their own classifications and definitions for the cover they provide and many fail to differentiate between self-employed individuals and company car drivers.

“Insurers who say it is fine for your ‘own business use’ normally mean for someone who runs their own business,” he says.

“This comes up quite a lot and the definition is not good enough.

"You need to make sure the insurer understands who and what the policy relates to.”

<li> When Fleet News spoke to companies proving business cover, including two of the biggest insurers, Sainsbury’s Bank and Halifax, we were assured that applying for cover was a step-by-step, comprehensive process.

However, we were unable to discuss the details of a hypothetical policy as customer services did not understand the intricacies of underwriting a policy and no underwriters were available to comment.

When an individual takes out business insurance, usually a variant of Class 1, they take it on faith that they are covered.

However, the complicated nature of different policies could mean this is not the case and many employees and fleet mangers will struggle to decipher the relevant documents.

"Most of the time it’s OK and the driver will be covered,” Mr Wallis assures fleet managers.

“However, you must have everything in writing. How many directors or managers understand what’s on a certificate of insurance?”