If you read nothing else, read this …
• Minor accidents are one of the most common causes of damage to company cars.
• Regular vehicle checks and a good risk management policy can help to identify why damage is occurring.
• Taking a proactive approach to reduce minor accidents can reduce insurance premiums.
Most organisations pride themselves on keeping their fleets accident free. Yet, many of their drivers may have been involved in bumps that they are blissfully unaware of. In some cases, even the drivers themselves may not have realised.
Minor prangs are one of the most common causes of damage to company cars. They may seem insignificant at the time, but just a small stone bouncing up off the fast lane; or bumping the curb while parking can reduce a car’s value.
Allowances for little bumps and scrapes, however, are often built into cars’ depreciation values. David Atkins, a consultant with Monks Partnership, explains: “[For essential users] the car is regarded as a tool of the trade. It’s accepted that there will be some surface damage.”
Organisations are therefore far more likely to be concerned with the cost of repairs. Where cars are provided through a fleet leasing arrangement, the leasing company will often carry out some remedial work to the car. If this is judged to be more than minor damage, however, organisations may be expected to pay. This can take employers by surprise. “It’s an unexpected cost for employers, as they have every faith in the ability of their drivers,” says Dean Woodward, consultancy and risk manager for DaimlerChrysler Services Fleet Management.
A fleet’s insurance policy will usually cover these costs. But many employers fail to assess how much of a risk their fleet is to insurance firms, which can affect how much the organisation is charged for cover. Derek Mason, operations manager at Zenith Vehicle Contracts, says: “It’s an unavoidable cost to the business as [employers legally] can’t afford not to insure their cars.” In order to permanently reduce accident bills organisations need to ensure that drivers are aware of the consequences of car damage. “Because they never see a bill, they don’t understand what the cost actually is,” says Mason. One answer is to charge employees for a set portion of the repair bill. Enforcing this policy, however, requires employers to strike a careful balance. Staff need to understand why it is necessary but appearing too draconian could prompt them to stop reporting damage until some months after the event, by which time even minor damage will cost more to repair.
A comprehensive risk management policy can also help to reduce the number of minor accidents. Keeping proper records of the causes of damage will enable employers to identify its main causes so preventative measures can be taken.
According to research by fleet leasing company, Arval PHH, for example, three out of the five top causes of damage – dents in car doors, excessive damage to alloy wheels and damaged front bumpers – are often the result of drivers’ poor manoeuvring skills. These can be easily improved by providing driver training courses for staff or even increasing the size of spaces in the company car park.
But determining how the damage occurred is not always straightforward. Mason explains: “Our biggest cost of accident damage is ‘hit while parked’, when the driver returns and there is damage to the car. It’s very easy for drivers to [claim this and] get away with it.”
And taking a proactive approach can have some hidden benefits. As Mason continues: “Many insurance companies will automatically give you a 10% discount if you are seen to be doing something.”