It is feared that many drivers are under-stating their annual business mileage or are not declaring its business usage at all in a bid to lower insurance premiums.
Fleets are now being warned to ensure employees opting out of company car schemes have business motor insurance or insurance premiums could be invalid in the event of a crash.
The poll of 600 company car drivers was carried out by fleet and fuel management group Arval.
The Association of British Insurers (ABI) claimed it was up to fleet managers to ensure that all drivers are correctly insured.
A spokesman said: ‘Fleet managers need to stress the importance to employees of disclosing that their own vehicle will be used for business and they also need to make clear the consequences of not doing so.
‘If a vehicle is not covered by the correct insurance and it is stolen or damaged when being used for business, the insurer could void the claim so it is very serious.’
Mike Waters, head of market analysis at Arval, said: ‘It is clear from these figures that individual drivers using cash-for-car schemes are often simply looking for the lowest cost motor insurance without considering business use and without understanding that the policy they purchase must specify business use as a consideration.’
In a separate study out this week by online insurer motor- insurance.co.uk it was found that almost a third of at-work drivers said they do now know whether they have the correct insurance cover when using their vehicles for business.
Andrew Dunkerley, marketing director at the website, said: ‘Despite the increased popularity of personal car use our survey findings expose a lack of awareness of the need for specific motor insurance policy cover when driving on business. ‘In simple terms, if they are not properly insured, they are breaking the law. It is a really serious matter.’