• Bluedrop Blogs and Guides

  • Bluedrop Insurance Blog
  • Understanding Grey Fleets and How to Manage Them

    Grey fleets are becoming increasingly popular in the world of business. Yet while this way of travelling has become a lot more common, it comes with its own unique set of challenges and responsibilities for employers.

    Understanding grey fleets and how to manage them

    What is a grey fleet?

    We all love the freedom of driving our own cars, and businesses have begun to embrace this as well. A grey fleet consists of personal vehicles, whether owned or rented by employees, used for work-related journeys. When employees drive these vehicles for work purposes, they often receive compensation, typically in the form of cash allowances or covering fuel expenses. As these vehicles are not company-owned, the employer bears responsibility for them – making sure the vehicles are roadworthy, properly insured and compliant with legal requirements for business use. This not only ensures safety and legality but also aligns with the company's duty of care to its employees and the public.

    Challenges and responsibilities in grey fleet management

    Grey fleets have grown in popularity in recent years. In major European markets alone, there are an estimated 70 million grey fleet cars, translating into substantial costs for businesses.

    Grey fleet management is different from company-owned fleet management. There are a lot of challenges, including keeping vehicles safe and compliant with the law, tracking mileage and expenses effectively, and reducing the environmental impact of older, less efficient cars.

    Legal and safety compliance

    Under laws like the Corporate Manslaughter Act 2007, businesses can face serious repercussions if an employee is involved in an accident while driving for work. As a result, companies need to make sure their grey fleets are roadworthy, insured and compliant with all regulations.

    Cost and environmental considerations

    Grey fleets can have a significant carbon footprint. It's important for companies striving for sustainability to think about their environmental impact and implement policies that restrict certain vehicles.

    How to manage grey fleets effectively

    1. Assess the scale: First and foremost, it's important to understand the extent of your grey fleet. This involves tracking how many employees use personal vehicles for business use and the nature of these journeys.

    2. Conduct regular checks: Regular checks are essential to ensure that all vehicles in the grey fleet are insured, taxed and have passed their MOT. These checks can be automated and streamlined with technology.

    3. A quick insurance check: Most car insurance policies don't include business use insurance unless you ask for it. Although it's the driver's responsibility to get insurance, the employer should check both the certificate and the policy to ensure that business miles are covered.

    4. Eco-friendly grey fleets: Older vehicles typically found in grey fleets can be less environmentally friendly. Employers should consider setting standards regarding emissions and vehicle age to promote a more sustainable fleet of vehicles.

    5. Effective communication: Any change in policy or practice should be communicated clearly and effectively to all employees. This includes sharing updated policy documents and ensuring employees understand and agree to these changes.

    Is a grey fleet right for your business?

    The decision to operate a grey fleet depends on several factors, including the size of your business and the nature of travel required. Here are some factors to consider:

    Business size and travel frequency

    For smaller companies that don't require regular travel, a grey fleet can be more practical and cost-efficient than a full company-owned fleet. The expenses associated with purchasing, maintaining and insuring a fleet of company vehicles might not be justifiable if travel needs are minimal. For larger organisations or those with frequent travel requirements, grey fleets can be complicated and expensive. In such cases, a company-owned fleet could offer better control, consistency and possibly even cost savings in the long run.

    Cost considerations

    Grey fleets often reduce direct costs like vehicle purchase, leasing and maintenance, which the company would otherwise have to cover. However, there can be significant indirect costs associated with managing a grey fleet, such as administration, monitoring compliance and managing expense claims.

    Administrative overhead

    Managing a grey fleet requires a systematic approach to tracking vehicle use, mileage and maintenance. This can be quite administratively intensive and requires dedicated resources or systems. It's important to have clear policies around personal vehicles used for business. This includes guidelines on reimbursement, insurance requirements and usage limits.

    Employee considerations

    Allowing employees to use their own vehicles can be seen as a perk and may even enhance overall job satisfaction. However, it also places more responsibilities on them, which might not be welcomed by all. By developing fair and transparent reimbursement policies for fuel, wear and tear and other potential expenses, you can keep disputes at bay and ensure fairness.

    To summarise

    Grey fleets can accommodate a variety of travel needs, offering a degree of flexibility that can be quite appealing. Yet, as with any business strategy, it comes with its own set of obstacles. By understanding the responsibilities of grey fleet management and adopting a structured approach, employers can benefit from this model while minimising risks and costs to their business.

    Want to find out more about Bluedrop's Fleet Insurance?
    Return to blog menu