Why Personal Vehicles Can Lower Your Company’s Liability Risk

More and more businesses are moving away from owning company cars, and for good reason. A recent survey found that 83% of companies now allow employees to drive personal vehicles for work. At the same time, 21% of business leaders still worry about the corporate liability that comes with it.

Here’s the twist: letting employees use their own cars might actually reduce your company’s legal and financial exposure. When you own the vehicle, you own the risk. When employees use personal cars, they bring their own insurance to the table, which can be a major advantage.

Company-Owned Fleets Carry Heavy Risk

Let’s say a salesperson gets into an accident in a company vehicle. Because that car is owned or leased by your business, any claims or lawsuits go straight to your company. You’re on the hook for damages, injury claims, legal defense, and rising commercial insurance premiums.

Commercial auto policies can cost twice as much as personal coverage, and claims filed against your company policy affect your entire risk profile. Plus, managing a fleet comes with its own admin burden: maintenance schedules, registration, insurance renewals, and usage policies all fall on your team.

The legal liability alone is enough to make any HR or operations leader take a second look. Companies with fleets are responsible for all vehicle-related accidents during business use, even if the employee was at fault. That’s a lot of exposure.

Personal Vehicles Shift Risk Back to the Driver

When your team uses personal cars for work trips, their insurance becomes the first line of defense. That means your company is no longer automatically liable for every fender bender or injury claim. You still need to manage compliance, of course, but it’s a very different (and smaller) risk picture.

Employees must maintain proper business-use coverage on their personal policies, and that’s where reimbursement programs like Fixed and Variable Rate (FAVR) come in. These programs help employees afford the right coverage without burdening your company with full ownership risk.

Here at Cardata, for example, we verify each driver’s insurance during onboarding and send automated reminders for renewals and lapses. That way, you can easily make sure every reimbursed driver is covered appropriately.

This model also avoids the legal gray area of commuting liability. With clear mileage logs and trip classification, you know exactly which miles were for business, and your policy can reflect that.

Protect Your Company Without Owning the Car

You can reduce corporate liability and still support your field team’s mobility. The key is having a structured vehicle reimbursement program with built-in compliance checks. 

Programs like FAVR allow companies to set reimbursement levels based on real costs, while tools like Cardata Mobile automate tracking and reporting.

Drivers log trips through a mileage tracking app that captures dates, locations, purposes, and odometer readings, creating a clear and IRS-compliant record. That means you have documentation in case of an audit or dispute, and your team gets fairly reimbursed based on actual driving.

Plus, when employees drive their own vehicles, your company avoids the residual liability of off-hours use. A company-owned car used for a grocery run after work? That’s still your risk. A personal car used for business, with proper logs and insurance? That’s their policy first.

The Bottom Line

If you’re among the 83% of companies already allowing personal vehicle use, you’re on the right track. And if you’re one of the 21% of leaders worried about liability, know this: the right program actually reduces it.

By transitioning away from company-owned fleets and toward personal vehicle reimbursement with strong compliance controls, your business can cut costs, lower legal exposure, and support your employees more efficiently.

Want help building a program that protects your drivers and your company? Talk to our experts today and see what’s possible.

Book a demo