In small and medium-sized businesses, many things are left unstructured as the business owner relies on his relationship with his or her employees to keep things under control.

In the case of a company car, it can be easy to skip creating a set policy and just deal with issues as they arise, but this leaves the company vulnerable to liability. As soon as an organization considers getting a company car or even a small fleet, it is important to exercise best practices and set a policy in place to ensure the organization and its employees are protected.

1. Define Responsibilities

The first area companies can run into trouble with is the question of who has responsibility for the upkeep and other expenses of the car. Unless this is clearly defined, employees may feel they are being burdened with managing a car they don’t actually own. Or they may take advantage of lax policies and abuse or otherwise misuse the vehicle.

Create a policy for how routine maintenance and gas costs are covered, along with accidents or other major repairs. If employees will be responsible for anything, make sure to get their signatures on those requirements. If the company allows employees to use the car for personal use, address how the employee will compensate the company for the miles/gas used.

2. Determine who Has Access

Access to a company car is generally considered a perk or a benefit awarded to certain employees. Include in the policy which employees qualify for a company car to protect against discrimination lawsuits.

In general, it is best to have an employee always use the same car, so it is easier to keep track of how the car is used as well as any damages. If a car is shared, have a strict check-in, check-out procedure with an inspection for damages by a third party.

3. Driving Standards

Poor driving in a company car puts the company at risk, so employers should have a strict policy as well as training on appropriate driving standards. Are employees allowed to talk on their phones while driving? Who is responsible for speeding or parking fines? How should an employee handle poor weather?

Business owners may consider requiring employees to take a defensive driving course before permitting them to drive a company vehicle, so as to reduce the chance of accidents.

4. Standards for Termination

On top of setting standards for how a car should be used, business owners should also set a protocol for withdrawing access to a company car. The policy should include a set of behaviors that warrant corrective action, as well as the process for taking the car away. Employees should be informed of and sign the policy when they join the company.

5. Get Liability Insurance

Even if a business requires its employees to have their own liability insurance, it is important for the company to still carry its own insurance in the event of an accident. Businesses should consult with a broker or insurance agent to determine the right policy limits for the company.

Questions regarding who will be insured need to be answered (will insurance include the driver's spouse?). Also, companies must consider coverage for personal items or company items that may be stolen from the vehicle.