A company vehicle use policy is a legally binding agreement that clearly defines what your business will and won't allow when an eligible employee uses a company vehicle. This policy protects businesses if an employee gets hurt while using company property or misuses it and causes damage.
Here's what to include in a company vehicle use policy for your business.
Policy overview
A policy overview should give drivers a summary of the requirements and rules for operating a company vehicle. It should include a brief description of what defines a company vehicle, along with when and to whom the policy applies (e.g., the policy applies both during and outside of working hours, should an employee be operating the vehicle).
[Read more: 5 Things to Know About Company-Owned Vehicles]
Qualifications for using a company vehicle
In this section, outline the employee qualifications for using a company vehicle. For example, an employee may qualify if they require a vehicle to complete their daily work responsibilities, such as a delivery driver. Others may qualify if they travel over a certain number of miles in a given time frame for work purposes, including traveling to a sales pitch or meeting with clients.
Qualifying employees should hold a valid driver's license and have a clean driving record, e.g., no car accidents through the fault of the employee within [X] years or fines/arrests due to violating vehicle laws.
Driver rules and responsibilities
Include a section regarding driver rules and responsibilities to ensure the employee remains safe while operating a company vehicle. Detail how you want employees to use these vehicles and what employees will use the company vehicle for, along with prohibited uses.
Additionally, this section should outline the specifics for employees and provide a list of rules to follow when operating the vehicle, such as following speed limits, driving sober, avoiding traffic violations, parking legally (not blocking fire hydrants or double parking), ensuring the driver carries their license, locking doors when not in use, and not texting while driving.
Personal use
The policy should clearly state how and when employees can use the company car. Most companies restrict vehicle usage to working hours only (or on a case-by-case basis) to prohibit personal use—your policy should explicitly state what personal use means to your business, such as using it for personal errands or commuting to and from work so employees don't misuse company cars.
[Read more: Do Your Employees Use Their Own Vehicles for Work? Here's What You Need to Know]
Employees with disabilities
Most employees with disabilities can still operate a vehicle and will likely qualify for operating a company vehicle. To remain inclusive, companies should define specific steps and accommodations they will make for drivers with a disability, such as providing parking spots. List eligibility exclusions as well, such as employees who are taking medications that may impair their ability to drive.
Accident procedures
In this section, outline the steps the driver should take if they get into an accident, including who the driver should report the accident to (such as the human resources department), where they can access registration and insurance cards, which information they should exchange with the other involved party, and who will be responsible for paying for the damages.
Insurance coverage and claims handling
Commercial auto insurance provides liability protection if an employee is in a work-related accident. It covers vehicles that are used for business purposes and any employees driving them.
If you or one of your employees is at fault in an auto accident, the other driver can file a lawsuit against your business. Your commercial auto insurance covers damages up to the policy limit.
In this section, state what the company will be responsible for, including ensuring the vehicle's safety, scheduling regular maintenance, and paying for car insurance and registration. Define what responsibilities your company covers and what you are not responsible for, such as covering fines and tickets incurred by employees who did not obey traffic laws and posting bail for arrested drivers.
[Read more: Have Company Vehicles? This Is What You Need to Know About Commercial Auto Insurance]
Fuel cards are a specialized type of company payment card usable only at service stations, and using one means you don't have to collect receipts and process reimbursements.
Tracking and monitoring vehicle use
Determine the method your team will use to track and monitor the use of the company vehicle. There are a few ways to do so, such as maintaining a mileage log and manually recording what's on the odometer or installing GPS. Some businesses reconcile gas receipts with onboard fuel consumption monitors. Choose a method and use your policy to make sure team members are consistent in their reporting.
Disciplinary actions
This section should list the fines or punishments the violator will incur if they misuse the company vehicle. For example, a minor offense may lead to warnings, but numerous minor offenses—or major offenses, such as drunk driving or leasing the vehicle for personal benefit—may lead to the revocation of the company car, employee termination, or legal action.
Vehicle maintenance schedules and driver inspection checklists
Your company vehicle policy should establish a clear, proactive maintenance schedule. Most vehicles need to be checked every six months for routine maintenance, including tire inspection and rotation, brake checks, and oil changes. However, commercial vehicles typically see more mileage, carry heavier loads, and spend more time in stop-and-go traffic, so your policy should set service intervals based on actual usage.
Equally important is implementing a vehicle inspection program to identify repairs that are not generally scheduled but may be required suddenly. Damaged lights, windshields, or flat tires all fall under this category. All drivers should be familiar with how to inspect a vehicle using a driver inspection checklist.
A fleet vehicle maintenance checklist outlines specific tasks, such as checking fluid levels and inspecting tires, brakes, lights, and other critical components, to keep vehicles in optimal working condition. Regularly require drivers to fill out a vehicle inspection report, creating an accountability trail that protects both your employees and your business.
How to handle traffic violations, tolls, fuel cards, and reimbursement
Your policy should make it crystal clear who pays for what regarding vehicle use. When it comes to traffic violations, the answer should be unambiguous: the driver. Employees should always be expected to pay for violations with their personal funds.
Tolls, however, are legitimate, reimbursable business costs when incurred during work-related travel. To keep toll reimbursements nontaxable for employees and deductible for the business, keep good records; electronic toll statements from systems like E-ZPass or FasTrak work well as supporting documentation.
Finally, there are a few ways to handle day-to-day fuel costs. Fuel cards are a specialized type of company payment card usable only at service stations, and using one means you don't have to collect receipts and process reimbursements. This option is convenient because employees don't have to save receipts and wait to be reimbursed.
For businesses where employees use personal vehicles, mileage reimbursement is the more common approach. The IRS standard mileage rate for 2026 is 72.5 cents per mile, which many employers use to keep reimbursements simple and nontaxable
Whichever method you choose, your policy should spell out the submission process clearly. Define the forms that must be filled out and set firm deadlines for submitting records, such as the first and fifteenth days of each month.
Sample company vehicle use policy template and acknowledgment form
There are dozens of company vehicle use policy templates online. Here are a few from reputable HR and fleet management platforms:
- Company Car Policy Template | Workable
- Sample Company Vehicle Policy Template | Lattice
- Company vehicle policy sample | Gusto
- Company Vehicle Policy | Betterteam
- Company Vehicle Policy Template | Enterprise Fleet Management
- Company Car Policy Template - Free PDF Download | Connecteam
- How to Create a Company Vehicle Policy? [Free Template Included] | Timeero
Make sure you customize any free template you find online with the information relevant to your particular fleet, use cases, and team members. Consult an employment attorney to be certain that your policy complies with state and local rules.
Miranda Fraraccio contributed to this article.
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