News from MCM - Article 103

Motor Traders - Guide to Vehicle & Driver Management

With the increasing sophistication of vehicle manufacture; vehicle repair cost inflation; and the ever-increasing propensity of the public at large to claim, there is little doubt that the introduction and observance of even the most basic risk management measures can have an impact on your policy premium.

Your Motor Traders Policy may cover you in respect of any accidental road:

• Loss or damage to your vehicles
• Loss or damage to customers vehicles in your custody or control
• Death or injury to third parties and damage to third party property

However, there will always be losses which are uninsurable so every effort should be made to minimise losses.

Your Legal Obligations

Health and Safety Regulations require you to assess and manage the safety of your employees and all other people who may be affected by their activities. To ensure that any risk management controls implemented remain effective, they must be regularly reviewed.

Effect of Vehicle Accidents

The overall effect of an accident goes far beyond that which is recoverable under your insurance policy. Consider how the following might impact on your business:

• Damage to reputation and the associated loss of custom
• Prolonged court attendance
• The psychological effect on staff - (if responsible for death or serious injury)
• Additional staff training costs
• A prison sentence and fine imposed
• Company morale
• Company directors being charged with corporate manslaughter

Most accidents and vehicle losses can be avoided if basic risk management controls are introduced. Claims can and have occurred due to:

• Driving without a licence or not having the correct licence for vehicle type
• High performance vehicles being driven by young or inexperienced drivers
• Unauthorised use of the vehicles
• Customers driving on unaccompanied demonstrations
• Poor vehicle maintenance
• Inadequate vehicle security

There are two main aspects you should concentrate on to reduce a possible vehicle accident or loss:

Driving

Introduce effective vetting procedures:

• Carry out a driving assessment when hiring staff
• Check anyone you permit to drive holds a valid driving licence
• Check all staff licences at least annually
• Report all driving offences to your Insurer
• Keep an up to date copy of the licence on file
• Ensure the 'licence checker' is competent to do so

Make it a staff requirement to inform you immediately if they have any DVLA restrictions. You may also wish to:

• Prohibit mobile phones while driving
• Prohibit alcohol consumption
• Ensure all travellers wear seat belts
• Stipulate all accidents are be reported to you in writing immediately so you can inform your Insurer when necessary
• Interview drivers (both staff and others) involved in a vehicle accident (may avoid similar accidents)
• Produce a driver handbook and ensure its contents are understood by drivers and make sure it's signed for in acknowledgement

Vehicle use

• Responsibility for authorising vehicle use should be given to a few senior staff and they must ensure records are kept
• Restrict non-staff and non-business use
• Keep records of who is using which vehicle and when it is due to be returned
• Ensure drivers know precisely what the vehicle may be used for, who can drive, and what they should do in the event of an accident
• Avoid the use of high performance vehicles by young/inexperienced drivers (under 25 years of age/have held a full licence for less than 12 months)
• Avoid customer demonstrations on major roads in peak traffic flow
• Ensuring compliance with any cover restrictions made by your Insurer - Staff should be fully aware of these restrictions
• Prohibit smoking in vehicles as in other work places and use appropriate 'No Smoking signage'
• Physically inspect vehicles for damage before and after use
• Ensure vehicles are regularly maintained and a maintenance log is kept (including tyre checks)
• Initiate a regular vehicle inspection scheme to check for damage and non-reported accidents - Investigate any irregularities
• Introduce a vehicle management system (e.g. DCML Ltd) to properly log and control:
• Vehicle loans or hires
• Unaccompanied demonstrations
• Vehicle maintenance schedules
• As well as provide a customer vehicle insurance solution
• Where customers are allowed use of a vehicle, check it will be properly insured under either:
• The customer's own insurance
• Your motor trade insurance
• A vehicle management insurance solution (e.g. as available via DCML Ltd)
• Ensure instructions are issued to all drivers that vehicles are to be properly locked and secured when not being used - this includes when the driver is not in the vehicle.
• Do not leave keys in or on the vehicle.
• Ensure keys for vehicles are stored in a secure location.
• Do not allow foreign use unless agreed in advance with your Insurer.

Summary

As you will probably appreciate, most of the management controls outlined seem little more than common sense. However the oversight of such controls are often the cause of vehicle accidents, often with dire consequences.

There is little doubt that implementing such controls can dramatically reduce the likelihood of your business being affected by Road Risks insurance claims and thus safeguard the future wellbeing of your business.

A little time, thought and effort expended now could help contain or even reduce your future insurance premiums.

December 2009