Company vehicle policy template
Copy the text below and replace everything in square brackets with your company details.
1. Purpose
This policy sets out how vehicles owned or leased by [Company Name] are allotted, used, maintained and returned, and the responsibilities of employees who use them.
2. Scope
It applies to employees allotted a company vehicle and to anyone driving a pool vehicle. Claims for employees' own vehicles used on company work fall under the Expense reimbursement policy.
3. Eligibility and allotment
- [Grades 7 and above] may be allotted a car with an ex-showroom value of up to [₹Amount].
- Field staff in [sales and service] may be allotted a two-wheeler for work.
- Pool vehicles are booked through [the admin desk] for official trips.
- The employee signs an allotment form listing the vehicle, accessories and condition at handover.
4. Use
- Allotted cars may be used for [official and reasonable personal use within India]. Two-wheelers and pool vehicles are for official use only.
- Only the allotted employee, or a driver provided by the company, may drive the vehicle.
- The driver must hold a valid licence for the vehicle class and must never drive under the influence of alcohol or drugs.
- A log of official trips is kept [monthly] for pool vehicles and two-wheelers.
5. Running costs
- Fuel is provided up to [Number] litres a month through [a fuel card or reimbursement against bills].
- Scheduled servicing, repairs from normal wear, insurance and road tax are paid by the company.
- Tolls and parking are paid by the company on official trips and by the employee on personal trips.
6. Accidents and fines
- Any accident is reported to [admin] and the insurer within [24] hours, with photographs and a police report where required.
- The company bears repair costs covered by insurance. Costs arising from negligence, drunk driving or an unauthorised driver are recovered from the employee within the limits on deductions from wages.
- Traffic fines and challans incurred while the employee was driving are paid by the employee.
7. Documents
- The employee gives a copy of the driving licence at allotment and after every renewal.
- Registration, insurance and pollution certificates are kept in the vehicle, and admin tracks their renewal dates.
8. Tax
Where personal use is allowed, its value may be taxable as a perquisite, and payroll treats it as per income tax rules.
9. Return at exit
- The vehicle, keys, documents and fuel card are returned on or before the last working day, and admin records the condition.
- Damage beyond normal wear and unpaid fines are adjusted in the full and final settlement, as agreed in the allotment form.
- [At the end of a lease term, the employee may buy the car at its written-down value where the company allows.]
10. Responsibilities
- Employees: drive safely, keep documents valid and report accidents and fines promptly.
- Admin: maintain vehicles, track renewals and manage fuel cards.
- HR and finance: record allotments, handle recoveries and apply the tax treatment.
11. Review
Admin and finance review vehicle limits, fuel allowances and running costs every [12] months.
What to include
Who gets a vehicle
Link allotment to grade or role and set a vehicle value limit. Clear eligibility heads off requests from every manager and keeps the fleet affordable.
Personal use rules
State whether personal use is allowed and who pays for personal fuel, tolls and parking. Personal use also has tax implications, so decide it together with payroll.
Licences and sober driving
Keep a valid licence on file and apply zero tolerance for alcohol and drugs. The company is the registered owner and is exposed if an unlicensed or drunk driver causes an accident.
Accidents and fines
Say how accidents are reported and who pays for uninsured damage and traffic challans. Keep any salary recovery for these costs inside the limits on deductions from wages.
Return at exit
Put the vehicle, keys, documents and fuel card into the exit process. A vehicle that is not returned on time is far harder to recover than a laptop or ID card.
Common mistakes to avoid
- Letting family members drive a company car without permission or insurance cover.
- Not tracking licence and insurance renewal dates.
- Paying traffic challans from company funds without recovering them.
- Allowing personal use without deciding its tax treatment.
- Releasing the final settlement before the vehicle and fuel card are returned.
Run it in ZeniaHR
Employee Documents in ZeniaHR holds each driver's licence with its expiry date, and HR can verify or reject the upload, so licences due for renewal are easy to spot. Signed allotment forms are stored with the employee's documents. Recoveries for fines or damage are entered as adjustment deductions in the payroll inputs of Direct Payroll, and at exit the vehicle return is confirmed during offboarding alongside the 8-item exit checklist.
See it on your own data
A 30-minute demo on a video call. We set up your departments, shifts and leave rules and show attendance, leave and payroll running for your team. Free for your first 50 employees.
Book a free demoSee pricingFrequently asked questions
Can an employee use a company car for personal trips?
Only if the policy allows it. Some companies allow reasonable personal use of cars allotted to senior staff, with personal fuel, tolls and parking at the employee's cost, while pool vehicles and two-wheelers stay official only. Personal use may be taxable as a perquisite, so involve payroll.
Who pays traffic fines on a company vehicle?
The employee who was driving should pay fines caused by their own driving, as the policy states. If the company pays a challan first, it recovers the amount with the employee's agreement, keeping within the limits on deductions from wages.
What should an employee do after an accident in a company vehicle?
Make sure everyone is safe and get medical help first. Then inform admin and the insurer within the time the policy sets, take photographs, note details of the other parties and file a police report where required. Do not agree to any settlement without approval from admin and the insurer.
What happens to the company car when an employee leaves?
The car, keys, documents and fuel card are returned on or before the last working day, and admin records the condition. Damage beyond normal wear and unpaid fines are settled in the full and final settlement as agreed in the allotment form, and some companies let the employee buy the car at written-down value.