Personal Car for Business Use | Who Pays in case of an accident?

Personal Car for Business Use | Who Pays in case of an accident?

Question: If an outside salesperson uses his own car for business purposes and gets into a car accident, is the company required to cover the cost of damages?

Answer: The answer depends on your corporate policy regarding the authorized use of personal vehicles and the facts and circumstances surrounding the accident. 

Generally, if employees use their personal vehicles for business purposes then their personal insurance covers the damage should an accident occur. Typically, there is a deductible in the event of a claim. Employees may think employers should pay the deductible if they are using their car for business purposes at the time of the accident. However, employers typically don’t provide reimbursement for deductibles or other costs incurred as a result of an accident because those costs are included in the mileage reimbursement rate. To alleviate confusion, it is best to clearly explain your corporate policy regarding the authorized use of personal vehicles for business purposes in writing in your employee handbook or expense reimbursement policy manual. Be sure to include an explanation of how the mileage reimbursement rate is set. Refer to the IRS website for more information to include in your policy. Include your approach to reimbursements in case an accident occurs. Be sure to include workers’ compensation claim filing information in the event that the employee is injured in the accident.

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Steve Donovan

Written by Steve Donovan