Almost every workshop has them: the two or three cars that customers get while their own vehicle is in for repair. They sit somewhere between new stock and scrap, cover a few thousand miles or kilometres a year, and are managed with a key board and a notepad. That works until something happens. This article covers what to settle so that it still works when something does.
1. Two models, one set of obligations
Courtesy cars run in two flavours that differ in accounting and customer expectation, but not in risk.
| Model | Free courtesy car | Paid hire car |
|---|
---|---|---
| Basis | loan as part of the repair service | hire agreement with a daily or mileage rate |
|---|---|---|
| Billing | none, cost is inside the workshop price | invoice to the customer or to a third-party insurer |
| Fuel | usually "return as found" | as agreed, typically full-to-full |
| Deposit | rare, but sensible for higher-value cars | standard, linked to the excess |
| Mileage | often capped (repair days × normal use) | included allowance plus excess mileage rate |
| Insurance | full hire cover still required | full hire cover required |
The last row is the one that matters. To an insurer, a free loan car is not a different case from a hire car. The customer drives, you do not know them, and when something happens the policy decides, not goodwill.
2. Insurance and registration: declare the use
In many countries, a vehicle handed over to changing drivers without a driver supplied falls into a specific category for insurance, and sometimes for registration. A trade policy that covers test drives and deliveries rarely covers a customer keeping the car for a week. The exact rules vary — some jurisdictions require a dedicated self-drive hire policy, some require the vehicle to be registered for hire use, some only require the insurer to be told. Check with your insurer and your registration authority, in writing, and keep the answer.
What to clarify regardless of country:
- Driver eligibility. Minimum age, minimum years holding a licence, licence categories. If you do not check, the insurer may reduce or refuse a payout.
- Excess. Fix the amount the customer bears per claim and put it in the agreement. "We'll sort it out if it happens" does not survive a dispute.
- Territory. Whether the cover extends abroad; if not, the ban belongs in the agreement.
- Named-driver rules. Some policies only cover drivers you have recorded before the handover.
This article explains principles, not legal advice for your country. Your insurer and registration authority confirm the specifics.
3. The agreement: even for a free car
"It's free, so we don't need paperwork" is the most expensive assumption in this business. Without a written agreement there is no agreed excess, no mileage cap, no basis for passing on fines and no return deadline. A courtesy car agreement fits on one page:
- vehicle (registration, mileage and fuel level at handover),
- driver (name, address, licence details — inspected, not photocopied),
- period of use and return location, extension only with your consent,
- costs: daily rate or "free", mileage allowance, excess mileage, fuel,
- liability: excess per claim, exclusion for gross negligence, handling of fines and tolls,
- signatures of both parties.
Which driver details you may collect, and why copying the licence is usually the wrong approach, is covered in Driver checks for vehicle hire. The clauses that actually decide disputes are in Rental agreement clauses that matter.
4. Handover and return: the five minutes that decide everything
Every dispute about a courtesy car turns on the same sentence: "That was already there." The only answer is a handover record with time-stamped photos — at handover and return, using the same sequence. For a car that means mileage, fuel gauge, interior, wheels and a close-up of every known mark. The full structure is in Equipment rental handover checklist, and the photo rules in Rental condition report photos.
Workshops have one particularity: the courtesy car is usually handed over by the service adviser who is simultaneously booking in the customer's own vehicle. Two cars, one customer, ten minutes. So the record has to run on a phone, not a clipboard — otherwise it gets skipped the moment the next customer is waiting.
5. Recovering the cost after a third-party accident
When the customer's car is being repaired after an accident that was somebody else's fault, the cost of a replacement vehicle is often claimed from the other party's insurer. How that works, and how much is recoverable, depends heavily on the country and on case law. Three things help everywhere:
1. Reasonable rates. Insurers scrutinise replacement-vehicle invoices. Keep your rate in line with the market for that vehicle class and document why the hire period matches the repair period.
2. Complete paperwork. Agreement, handover record with mileage, and a proper invoice.
3. A clear role for the customer. The customer remains your contracting party. Whether and how much a third-party insurer pays is a claims matter, not part of your agreement — one sentence saying so avoids the argument when the insurer cuts the amount.
6. When you need a system
With one courtesy car, the key board is enough. With four cars, two sites and repairs that slip by days, you get the problems of any rental fleet: double allocation, a missed inspection, unclear mileage, deposits nobody released. That is the point to keep availability, agreements, handover records and deadlines in one place — on the service adviser's phone.
Utilisation per car and cost per courtesy day tell you whether a fifth car pays for itself; how to measure that is in Rental fleet utilisation.
Where Flotello fits
Flotello runs courtesy cars like a small rental fleet: availability in the calendar, agreement from a template, driver details without photocopies, handover record with photos and signature on a phone, mileage and fuel at handover and return, inspection and insurance deadlines per vehicle. A deposit can be held on a card and released at return. A workshop with a handful of cars fits the smallest plan — see the pricing page, the handover guide in the help centre, and registration without a credit card.
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