Joe, saw your comments about fleet management, may I please get a copy of your spread sheet. Also, what fleet management company did you talk to ? Enterprises says we are too small at 20 trucks.

Thanks, Steve

Patricia- companies are switching back-and-forth all the time between the following options:

1.  Fixed allowance, or fixed allowance plus gas card- easy to administer but is taxable to both employer and employee.  Greg Stefan makes some excellent points regarding actual versus perceived liability under scope of employement... not recommended in most cases.

2.  Variable (usually according to IRS cents-per-mile $.55 today)- this option is also easy to administer and is not taxable.  Perfect for high turnover situations.

3.  Fixed and variable (aka Runzheimer plan, FAVR) is regionally specific and not taxable.  Probably the most equitable for both high and low mileage bands of drivers among 1-3.

4.  Revisit company-provided program: if your superintendents drive a lot of business miles (25K+ annual) I would recommend getting with a qualified fleet management company to structure an improved plan that features an efficient/appealing vehicle, cost-control, and driver support, and of course the right risk management as Greg discusses.  Can and should be the most cost-effective, and your supers still enjoy a quality benefit.

Call or email me if you want spreadsheets, etc., or feel free to call me at 310 851 3460 to discuss.  Joe

Patricia, this approach has become more common in many segments of the industry; however, I always want to be sure a company realizes the potential liability they still have even when a driver is in a personal vehicle that is used on company business.  From an Auto Liability insurance standpoint this is considered a "non-owned" auto exposure to your firm, which is a covered exposure on most Commercial Auto Policies by virtue of Symbol 1 on your AL policy.  This means that if an employee in a personal vehicle on company business is involved in a serious accident, there is coverage available to protect your company in the event the damages exceed the driver's personal auto liability limits.  This is a critical issue to ensure you are managing properly - make sure that you have mandated a minimum allowable limit for liability coverage on the driver's personal auto policy.  Generally speaking, a common requirement is the for the driver to maintain at least a $300,000 combined single limit on their personal auto policy, and they should be required to provide you with evidence of this limit at least annually.  In some cases, contractors have moved this to a higher limit; however, you have to consider that in the allowance you will be reimbursing the employee.  In this scenario, your company's non-owned coverage would come into play after the personal auto policy limits have been exhausted.  If a company does not mandate and verify the minimum limits, then the employee could obtain only state mandated minimum limits, which in some cases is as low as $10,000.  Obviously a huge potential liability to your company if a serious accident occurs while the employee is "on duty".  Another issue to consider is that you should have a formal Fleet Safety Policy that adddresses the use of all vehicles on company business.  This would include a specific secton to address required personal auto limits.  We also always recommend that the employeer establish MVR criteria that will define what an acceptable MVR is in order for the employee to use their own vehicle on company business.  If a company turns a blind eye toward checking the employee driver's MVR on a regular basis, and a serious boldily injury accident occurs, the company could be brought in via allegations of "negligent entrustment" that relates directly to a lack of due diligence on the part of the employer to verify that an employee should be permitted to drive on company business.  In very serious cases, where a driver has a horrible driving record, the employer can get stuck with even punitive damage awards.  I would recommend that you discuss this with your insurance carrier as they should be able to assit you with the fleet policy as well as addressing best practices in regards to personal vehicle management.  If you want to email me directly, I can be reached at gstefan@archinsurance.com and I can send you some information on these issues.  I hope this is helpful.

 Greg Stefan, VP Risk Control, Arch Insurance Group

We did away with almost all company owned vehicles about 15 years ago. The only vehicles that remain as company vehicles are the heavy duty trucks that carry a lot of tools and equipment. Our motivation was to reduce our liability and to cut our vehicle expenses. It was not a popular decision, but one we felt we had to make.

The key to sucess is how you make the transition and how it is communicated. We offered our existing trucks to the co-workers who were driving them at a heavily discounted rate.  We did this over a six month period of time to allow the co-workers time to plan and adjust to the "new deal"

Currently, we pay truck rent but it does not cover the full cost of the vehicle.