David Faithful, solicitor and partner at Amery-Parkes Solicitors, has cautioned company bosses that they could find themselves in the dock unless they ensure staff are correctly insured when driving their own cars on business.
He said leaving insurance responsibility in the hands of drivers who opt out of traditional company cars in favour of cash allowances could expose directors to a financial penalty or court action.
'A driver may not realise the implications of the limited occupational cover on normal car insurance policies, and this could well expose the employer to a claim with no insurance cover to protect them,' said Faithful.
'Fleet managers must become involved with PCP schemes from the start and look at them as part of a complete risk assessment. Offering drivers a PCP scheme does not absolve employers of responsibility.'
Some employers view cash for car schemes as an opportunity to reduce the administrative hassle involved in running a fleet, but the Work-related Road Safety Task Group wants to see employers take more not less responsibility for at-work drivers.
And PCP drivers responsible for buying their own insurance have a strong financial interest in selecting a policy with no business mileage cover.
A mystery shop by Fleet News found that a 33-year-old computer salesman based in Peterborough and covering 20,000 miles a year in a BMW 320i SE could expect to see a difference of up to 45 per cent between private and business insurance premiums.
Cornhill Insurance, for example, quoted £1,100 a year for non-business insurance and £1,600 for business. Zurich quoted £1,150 for non-business and £1,380 for business, while Norwich Union quoted £990 for non-business and £1,170 for business.
Ron Munro, assistant manager, underwriting and marketing for Zurich Insurance, said: 'If fleets set up a personal leasing scheme and ask drivers to insure it individually the major issue is loss of control and management of information.'
One solution open to employers is to insure all employees under a corporate umbrella policy to ensure staff are covered when taking their vehicles out on business, although this may have benefit- in-kind tax ramifications.
Faithful called on employers to establish a system to make sure a vehicle was properly insured, maintained and suitable for the job.