Can an Independent Contractor Drive a Company Vehicle? Liability Issues Surrounding Company Cars

As independent contractors become more and more commonplace in today’s working world, businesses and contractors have been forced to consider some of the legalities and nitty-gritty details. There has been a lot of discussion over questions of what independent contractors can and cannot do on the job, and what organizations are liable for regarding their independent contractors. For example, can an independent contractor drive a company vehicle?

The recession has answered the question for some (regarding maintenance costs outweighing other factors), but for others who are keeping their company trucks, cite the importance of controlling their company image.

All agree that if you have company vehicles, it’s mandatory to keep them clean and in excellent shape, something that employees may have difficulty doing. There are also some legal aspects to consider with your company vehicles.

Who Owns the Vehicle?

There are three issues that must be considered when determining vehicle use: insurance, employee classification, and advertising and branding. 

Insurance

Whether employees drive a company car or their own vehicle, drivers must be covered by an auto policy that is part of commercial general liability insurance or a separate commercial auto policy. Make sure you are equipped with coverage for any issues that may arise involving an automobile used in the scope of employment.

Employee Classification

Generally, independent contractors would use their own vehicles. You don’t want it to appear that they are a W-2 worker when he is actually a 1099 worker. Make sure you’re an “additional insured” on their policy.

Ads and Branding

 If you put advertisements or company branding on your vehicle, you must have certain disclosures on it, such as a contractor’s license number. You might put a sign on an independent contractor’s vehicle, but rules for that vary by state. 

If using independent contractors, have a branding agreement with them stating you are asking the installer to install the sign for consumer safety — you want clients to see that this person is legitimate and not be afraid when he shows up at their house. 

Without this memo, there could be a loss of worker classification at the state level. The court might find that the worker is an employee rather than an independent contractor. 

The Answer

Can an independent contractor drive a company vehicle? Yes, a business could authorize or require the use of a company vehicle by a driver/courier who is working as an independent contractor. As with any independent contractor relationship, however, you must be cautious of undermining the individual’s status as an independent contractor by treating this individual as an employee.

One of the hallmarks of an independent contractor is that typically they provide their own tools. And an essential tool for a driver position is, of course, a vehicle. That means you must carefully structure the relationship to suit your needs. For example, you want to ensure that the driver still operates independently. So you might charge the driver a fee for the use of the vehicle. All other expenses should be borne by the driver, including proof of sufficient insurance.

About Daniels Insurance, Inc.

At Daniels Insurance, Inc., we have a unique understanding of the risks that people like you face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.