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Safety & Accident

Should Companies Charge Employees Deductibles for Preventable Accidents?

Several questions must be asked and answered prior to adopting a corporate policy of charging deductibles for preventable accidents.

April 2010, Automotive Fleet - Feature

by Richard D. Alaniz

Personal Use Can Impact Collection

Companies should also consider how allowing personal use of company vehicles could affect the ability to collect deductibles. For many companies, the easiest approach is to forbid any type of personal use of company vehicles, particularly for any driver other than the employee. However, in some industries and organizations, allowing personal use of a company car represents a significant benefit that can help recruit and retain talent.

If employees are allowed personal use of a company vehicle, policy must clearly outline who can drive that vehicle. Some companies limit use to a spouse only, while others restrict personal use to immediate family. Some allow any licensed driver over a certain age.

Anyone authorized to use the company vehicle must understand the company's regulations, including the policy on deductibles in cases of preventable accidents. It's worth requiring employees, eligible family members, and anyone else who may drive the car to undergo training or at least sign a written form acknowledging they understand their rights and responsibilities.

Charging employees a deductible is complicated enough - getting an employee's spouse or child to pay may be even more difficult. Some insurance companies encourage employers to include a provision in their policies that explicitly states the employee is responsible for the deductible of any insurance claims that result from an accident while that employee's vehicle is driven for a personal reason, regardless of who was actually driving the car at the time of the accident.

Other Options Available

Rather than charging deductibles, employers may want to consider other approaches to discourage unsafe driving or punish such activities. Education and safe driver training designed to minimize accidents is one proactive approach.

Discipline for accidents is another. As parents of teenagers know, taking away the keys to the car can be a highly effective form of punishment. If an employee has had several accidents, termination may be the final option.

When it comes to charging employees deductibles for accidents they could have prevented, there are many aspects to consider. Whatever approach taken, ensure it makes sense from a financial, logistical, and employee morale perspective. Since laws vary greatly depending on state laws or regulations and type of insurance, seek expert advice from lawyers, insurance brokers, and HR staff familiar with the issues.

Once the right policy has been selected, be sure employees are educated about the policy and have signed all necessary documentation. In case of disputes, the ability to prove a policy was well thought-out and consistently implemented is important.

About the Author

Richard D. Alaniz is senior partner at Alaniz and Schraeder, a national labor and employment firm based in Houston. He can be reached at (281) 833-2200 or [email protected].

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