Grey fleet is one of the most misunderstood areas of business insurance in the UK — and one of the most expensive to get wrong. If your employees use their own vehicles to carry out work for your business, even occasionally, you have a grey fleet. And with that comes a legal duty of care that most business owners don’t realise they’re carrying.

This guide explains what grey fleet insurance is, what the law requires, how to manage the risk, and what options businesses have for putting proper cover in place.

What Is Grey Fleet Insurance?

The term “grey fleet” refers to any vehicle that is privately owned by an employee but used for business purposes. This includes everything from a sales rep driving their own car to client meetings, to a care worker using their personal vehicle to travel between service users, to an engineer using their van — which they own personally — to get to job sites.

Grey fleet insurance is the collective term for the cover arrangements that manage the risk these journeys create for your business. It is not a single product you buy off a shelf — rather, it’s a combination of checking that employees hold the right personal insurance, adding occasional business use cover to your existing fleet policy where relevant, and putting in place a management system that gives you documented evidence of compliance.

The key distinction from standard fleet insurance is ownership. A fleet policy covers vehicles owned or operated by the business. Grey fleet is about vehicles the business does not own — which is precisely why it creates a management challenge that many businesses ignore until something goes wrong.

What Are Your Legal Obligations as an Employer?

This is where many business owners are caught out. The assumption that “they own the car, so it’s their problem” is legally incorrect and potentially very costly.

Under the Health and Safety at Work Act 1974, employers have a duty of care for the health, safety and welfare of employees during the course of their work. The law does not distinguish between a company vehicle and an employee’s personal car — if the journey is being made for work purposes, it is a work activity, and the employer carries responsibility for it.

The Road Traffic Act 1988 further requires that any vehicle used on public roads is properly insured for its intended use. A standard personal motor policy does not cover business use journeys — which means an employee driving to a client meeting on their own policy, without a business use extension, may be driving uninsured. If an accident occurs, the third party could pursue your business directly.

What Insurance Does a Grey Fleet Driver Actually Need?

This is the practical question most employees and employers get wrong. A standard personal motor policy is issued with one of three use classes:

For the vast majority of grey fleet situations — an employee driving to client meetings, visiting sites, or travelling between offices — Class 1 business use on their personal motor policy is the minimum requirement. It is your responsibility as the employer to verify this before permitting the employee to make work journeys in their own vehicle.

The cost of adding business use to a personal motor policy is typically modest — often £20–£60 per year depending on the insurer and the individual’s profile. It is not expensive. The problem is that many employees either don’t know they need it, or don’t bother adding it, and employers don’t check.

How Does Grey Fleet Fit Into a Business Fleet Policy?

If your business already has a fleet insurance policy, it may include an “occasional business use” extension that provides a backstop layer of cover when employees use their own vehicles for work. This is worth checking with your broker — not all fleet policies include it as standard, and the terms vary significantly.

An occasional business use extension on a fleet policy typically covers the gap that arises when an employee’s own insurance either doesn’t include business use, or is found to be invalid at the time of a claim. It acts as a safety net — but it should not be treated as a substitute for ensuring employees hold proper cover on their own policies. Relying entirely on the fleet policy backstop without doing your own checks is still a compliance failure in the eyes of the HSE.

How to Manage Your Grey Fleet: A Practical Checklist

Grey fleet management is as much about documentation and process as it is about insurance. Insurers and the HSE both want to see evidence that your business has taken reasonable steps to verify driver suitability and vehicle roadworthiness. The following checklist covers the minimum standard a UK business should be meeting.

Grey Fleet vs Company Car: What’s the Difference for Insurance?

The environmental point is increasingly relevant. Businesses with sustainability reporting obligations — particularly those working with large corporate clients or public sector contracts — find grey fleet hard to manage within carbon reporting frameworks. Each personal vehicle has different emissions data, and actual business mileage relies on employee self-reporting. This is one of the drivers behind some businesses choosing to convert grey fleet to a managed fleet as they grow.

When Does Grey Fleet Become a Fleet Insurance Question?

The line between grey fleet and conventional fleet insurance becomes relevant when:

• → Volume increases. If multiple employees are making regular work journeys in their own vehicles, the administrative burden of checking individual policies annually becomes significant. Many businesses at this point choose to provide company vehicles instead — which brings them into fleet insurance territory.
• → A claim arises. If a grey fleet driver has an accident and their personal policy doesn’t pay out, your business fleet policy may be called upon — this can affect your no-claims history and your renewal premium.
• → You have cash allowance drivers. Employees who receive a car allowance in lieu of a company vehicle are still considered grey fleet. The allowance doesn’t transfer insurance responsibility to the employee — your duty of care remains unchanged.
• → Your insurer asks. At fleet policy renewal, insurers increasingly ask about grey fleet usage. Failing to disclose that employees use personal vehicles for business purposes can be treated as a material non-disclosure, which may affect the validity of your fleet policy.

Frequently Asked Questions