Fleet News

Business use insurance: are your grey fleet drivers really insured?

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Your grey fleet drivers have signed a statement declaring their vehicle is insured for business use.

You assume they have the appropriate cover.But without checking their insurance certificates, can you really be sure?

Of the 6,000-7,000 grey fleet insurance certificates checked by Alphabet every year, about 20% do not have the appropriate cover.

“Drivers don’t understand what they need and it doesn’t cover them properly,” says Diarmuid Fahy, manager fleet risk services at Alphabet.

There are generally five types of cover:

  • Social, domestic and pleasure, excluding commuting
  • Social domestic and pleasure, including commuting
  • Class one business use
  • Class two business use
  • Class three business use

The first two types do not cover business use but employees do not always realise.

“A common mistake is to think that ‘commuting’ is sufficient,” says Fahy.

“A lot of people assume that going to another office is commuting but it’s not the employee’s usual, permanent place of work. People don’t know what they are insuring themselves for and go for the lowest cost.”

Some grey fleet drivers are guilty of not checking the insurance certificate. “Some certificates are very clear,” says Fahy. “Some state that it does not include business use.”

However, not all insurance certificates are black and white and can cause confusion for the fleet manager checking them as well as the drivers.

A random sample of insurance certificates which Fleet News checked all contained slightly different wording.

Gareth Roberts, fleet manager at Natural Resources Wales, says: “Some certificates are quite woolly. If I don’t see business use on there I challenge the employee to get confirmation from their insurer.”

Some insurers include ‘business use’ as standard while others won’t cover it at all.

Understanding the anomalies can be a nightmare if you have a significant number of grey fleet drivers and have only just taken on grey fleet responsibility, as one fleet manager found out (see case study).

Steve Stock, senior motor underwriter at Zurich Global Corporate, says: “There are hundreds of definitions because of all of the dot.coms.

"Each one will have a different take on business insurance. It’s a licence to price policies differently in the personal lines arena.”

Mark Sherman, manager commercial motor at Allianz, agrees that it’s a “recognised issue”, but says that the insurer should give a definition at the start of the document.

“There are different definitions depending on the use of the vehicle,” he says. “The employee needs to fully declare the nature of their business.”

More on page 2

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  • Nigel Boyle - 14/03/2014 12:26

    Don't assume anything. With Duty of Care and Corporate manslaughter assumptions can mean prison! We buy Business Cover so the drivers do not have to add it them selves. Our insurance is only valid with their standard insurance so we maintain a database of all their insurance, tax and MOT details that automatically emails when they are expiring. We also get drivers to sign a DVLA mandate that lasts 5 years and allows checking of their license whenever we deem necessary during that time.

  • Diarmuid Fahy - 03/04/2014 15:27

    Nigel, just a word of caution. The DVLA mandate lasts a maximum of 3 years, so make sure your renewal policy reflects this. Other than that, it's great to see such a responsible, well-informed approach.!

  • Joe Whittaker - 06/06/2014 12:21

    I believe it would be very helpful to all of your corporate readership if FN produced a an E Book or hardcopy book to assit Fleet Managers in reagrd to business use insurance as for example this article does not explain what Class 1 business use is and how it differs from the others.One of the large brokers would perhaps be able to assist or sponsor this. AIRMIC wouldbe another source of expertise to explore as they represent Risk and Insurance Managers in industry and commerce.

  • sarahtooze - 06/06/2014 13:13

    Thanks for your feedback Joe, the definitions are on page three of the article, here

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