Former employee won't return the company car: casco?

The employment has ended – by notice, by mutual agreement or on bad terms – and the employee has not turned up at the company premises with the car. They have the key, the registration certificate is in the glovebox, and the phone rings unanswered. The fleet manager's first question – as a broker, this is what I see – is typically the same: “This is theft – shall we report it under the casco?” The short answer: both criminal law and the casco (comprehensive motor insurance) conditions use different words for this situation than everyday language does, and caught between the two, the company can easily set off in the wrong direction. This article explores the company angle; the similar case involving private individuals – a car taken on a test drive and never brought back – is covered on casco.biz.

In brief:

Keeping a car that was lawfully handed over with its key is typically not theft under criminal law: depending on intent, it may qualify as embezzlement or as unauthorised taking of a vehicle (unauthorised use) – this is decided by the investigating authority, but it is worth filing a criminal complaint regardless.
As typically worded in Hungarian policy conditions, the theft cover of casco (comprehensive motor insurance) applies to the unlawful taking of a locked vehicle by a third party; most conditions exclude, or deal separately with, the failure to return an entrusted vehicle – this varies from insurer to insurer, and your own fleet conditions are decisive.
The company's route is a written demand, a criminal complaint and a civil-law claim; meanwhile, the compulsory motor third-party liability insurance (kgfb / MTPL) and the company's liability as keeper continue, and with a leased car the financier must also be involved.

Theft, embezzlement or unauthorised use? Here, words are worth money

The Hungarian Criminal Code (Btk.) has three clearly distinguished offences in this area, and the difference lies in how the car came to be with the employee and what they intend to do with it. In the everyday sense, theft means taking another person's property in order to appropriate it – a car broken into and driven away without a key is theft. The departing employee, however, did not take the car: the company entrusted it to them, with the key, a logbook and written rules. If they unlawfully appropriate the entrusted item or dispose of it as their own – sell it, pledge it, make it disappear – that falls within embezzlement. If they “only” keep using it and put off returning it, the unlawful use of an entrusted motor vehicle comes close to the offence of unauthorised taking of a vehicle. Which of these applies is determined not by the company but by the police and the prosecution service, based on intent and the circumstances; the company's task is to report the facts and to document them. As a broker, I see that many people put off filing a criminal complaint because they “don't want to accuse a former colleague of theft” – but a criminal complaint is not an accusation, it is a statement of the facts, and the casco conditions also make further steps conditional on it.

What does casco say? The limits of theft cover

As typically worded in Hungarian policy conditions, the theft cover of fleet casco applies to the unlawful taking, by a third party, of a vehicle that was properly locked and left unattended: a break-in, defeating the lock or the immobiliser, a car driven away with a stolen key. The failure to return an entrusted vehicle does not fit this picture: there was no intrusion by an outsider – the company itself handed over the key and the vehicle. That is why most policy conditions expressly exclude from theft cover embezzlement, vehicles obtained by fraud and the unauthorised continued use of a vehicle handed over for use, while others achieve the same result through the concept of “unlawful taking” – this varies from insurer to insurer; you need to read the theft section of your own fleet conditions. The distinction is important: this is an exclusion, not an exemption of the insurer (a case where the insurer is released from paying). It is not that the insurer refuses to pay because of a fault on the company's part, but that under the contract the event is not an insured event; the insurer pays only for what is an insured event under your contract. Where the conditions do provide cover, a police report is typically required, together with the waiting period set in the conditions – a period that varies by insurer, counted from the police report or the claim notification – passing without the vehicle being recovered; in claims settlement, the insurer typically checks whether all the keys and the registration certificate have been handed over. The general course of a theft claim is described in the article on theft claims. If the car turns up but damaged, the assessment of the collision damage depends on who was permitted to drive the vehicle under the conditions and whether they exclude damage occurring during unauthorised use – this is covered in detail in the article on the circle of permitted drivers. Under the insurance chapter of the Hungarian Civil Code (Ptk.), the insurer may seek recourse against the person who caused the damage up to the amount it has paid, so the former employee may also face a claim from the insurer.

What continues in the meantime: MTPL, keeper's liability, leasing

As long as the car is with the former employee, the company remains the keeper. The compulsory motor third-party liability insurance (kgfb / MTPL) has to be kept in force by paying the premium, the company car tax and the premium keep running, and if the former employee causes damage with the car, the injured party is paid by the company's MTPL insurer. Under Section 34 of the Gfbt. (the Hungarian MTPL Act), however, the insurer may claim back the amount paid from a driver who drove the vehicle without the keeper's permission – once the employment has ended and a written demand to return the car has been sent, this lack of permission can be documented. Employer's liability under Section 6:540 of the Ptk. covers damage caused in connection with the employment; where damage is caused with a car used after the employment has ended and despite the demand, the company's position is different, but in an individual case this is for a lawyer to assess. With a leased or long-term rental car, the financier is the owner, and the contracts typically require the disappearance of the vehicle to be reported; the financier is typically also the beneficiary of the casco policy, so claims settlement usually cannot be completed without it – the article on keeper, owner and leasing gives an overview of the parties involved.

The company's legal route: demand, criminal complaint, civil claim

On termination of employment, the Mt. (the Hungarian Labour Code) requires the employee to hand over their job and to settle accounts with the employer – returning the company car, the keys, the fuel card and the accessories is part of this. The first step is therefore a written demand, sent in a way that can be proved, with a short, specific deadline and a statement of the legal consequences; later, this also serves as evidence in the criminal complaint and in a civil lawsuit. If the deadline passes without result, the next steps are a criminal complaint to the police setting out the facts, and notifying the insurer via the claims line or the fleet portal, even if cover is doubtful: reporting is the company's obligation, deciding on it is the insurer's. Through the civil courts, the company can demand the surrender of the vehicle, payment for the use without legal grounds and compensation for its loss; a claim for damages against the former employee is governed by the employee liability rules of the Mt. for damage caused during the employment, and by the general rules of civil law after that – the limits of this are discussed in the article on employee liability for damage. A telematics tracker is useful in such cases, but it should support the work of the police, not a company “recovery operation”: taking the car away from the former employee's home on your own authority creates yet another legal dispute.

Prevention: the exit routine

Most such cases arise not from ill will but from muddle: it has not been laid down when and where the car must be returned, how many keys there are, or what happens to its use during the notice period. It is worth including the exit procedure in the vehicle use policy: place and time of return, number of keys, registration certificate, fuel card, vignettes, the handover report and photos; and it is worth taking back the key and the car on the spot at the same time as the employer's notice of termination is delivered, not days later. If the company uses a tracker, under Section 11/A of the Mt. the employee must be informed in advance and in writing about the technical device used for monitoring – location data collected lawfully carries weight with the police; data collected covertly only brings trouble.

What should you do in practice?

If it has already happened: a written demand with a deadline, then a criminal complaint, notification to the insurer and – if there is one – to the financier, payment of the MTPL premium, and gathering the documents (proof of termination of employment, the demand, the key list, photos) in one place. If you get stuck, I help where I can; it is worth coordinating the criminal-law and employment-law steps with a lawyer. In this type of case, the insurer is rarely the solution – but in most cases the exit routine is.

Have a question specific to the exit procedure in your own fleet? Book a free 20-minute consultation →

Sources

This article is for information purposes only; it contains general information and does not constitute an offer or insurance advice. The exact content of insurance contracts is defined by the insurers' terms and conditions in force. The criminal-law classification and the enforcement of claims against a former employee are legal questions – in an individual case, seek a lawyer's opinion; the conditions under which casco pays are determined by the insurer's policy conditions in force at the time.

A former employee did not return the company car: theft, embezzlement – and what does casco say?