If you use one or more vehicles in your small business you probably already know how important it is to keep records of your mileage and vehicle-related expenses. The practice of keeping records can help you come tax season, with regulatory bodies, and with your insurance. In this article, we’ll explain why it’s so important to your commercial vehicle insurance provider that you keep these records.
Reason No. 1: Premiums are based on usage.
While premiums may be calculated slightly differently depending on the insurer, they all look at similar factors. This includes how much you drive your commercial vehicles. You’ll pay lower rates if your commercial vehicle is only used once a week versus someone who’s driving every day.
Keeping a driving log helps determine usage. It’s good practice to write down (or use an app to record) every kilometre driven for work, when you’re driving, where you’re going, and the reason for the trip. You should also note expenses incurred such as gas and any issues noticed in your vehicle walk-around. Keep any receipts and note repairs and maintenance work in the logbook as well.
This can help verify your vehicle’s roadworthiness, validate business use, and confirm expense claims in the future.
Reason No. 2: Better documentation means better rates.
Driver error is the leading cause of collisions. But documentation can help minimize human error and therefore keep your insurance rates lower. Require all drivers to document their safety checks and keep an accurate maintenance record of the vehicle. This helps ensure the vehicle is properly maintained and all safety protocols are followed.
The safety maintenance program should include:
- vehicle checks
- teaching drivers safe driving techniques
- a review of the laws of the road
This should then be documented along with the reason for each trip the distance and when repairs and maintenance work is done on the vehicle.
While you can’t be with every vehicle on every delivery at every point of the day these safety maintenance program logbooks can provide a day-by-day account of what that vehicle has done and how it was maintained. Since you and your business are ultimately responsible for the operation of these vehicles these logbooks are integral in documenting your commitment to safe operations.
Reason No. 3: Prove it’s worth.
Being able to validate or justify an expense isn’t the only reason for keeping a logbook. If the vehicle ends up involved in a collision these maintenance records will go a long way to establishing the value of the vehicle.
Of course, many people assume that if you’re involved in an accident your vehicle will automatically be repaired but that’s not always the case. Insurance companies will first determine the value of your vehicle; if it’s worth less than the cost of the repairs your insurance provider may decide to write you a cheque for the truck’s current value rather than pay for repairs. One important component of a truck’s value is how well it’s been maintained. The more routine and preventative care you can prove the easier it is for the vehicle to retain it’s value. The easiest way to show this is to provide your insurance provider with your vehicle maintenance records.
Reason No. 4: It’s the law.
According to the insurance regulations, all commercial carriers and any business that uses trucks or vehicles for commercial purposes must maintain certain records that can be accessed at any time. For instance in Manitoba, maintenance and repair records must be kept for a minimum of two years while in Alberta all businesses that use commercial trucks must comply with Commercial Vehicle Certificate and Insurance Regulations as well as federal regulations. For most provinces, the records that must be kept include:
- Bills of loading
- Dangerous goods documents
- Driver training documents
- Driver daily logs
- Trip inspection documents
Your company must keep a driver file for each person authorized to drive a company-owned commercial vehicle. These driver files must include:
- The driver’s completed application for employment plus last three years of employment history.
- A copy of the driver’s abstract at the time of hire as well as an annually updated copy of each driver’s abstract.
- A record of each driver’s driving convictions and penalties.
- A record of all collisions each driver has been involved in.
- All training that is completed by each driver.
While all this paperwork and record-keeping adds a level of complexity to owning and using a company vehicle it also goes a long way to protecting you and your business by helping you justify tax-deductible expenses and by offering evidence of driving patterns and policies that help your independent insurance broker find the most cost-effective coverage for your needs.