If you answered “yes” to this question, then you may want to check your insurance coverage to see if you’re protected from possible claims. Even with a commercial auto policy in place, you may not be covered.
How is that possible?
Well, here are some potential scenarios to consider:
- Do employees occasionally use their own vehicles to run quick errands on your company’s behalf like going to the post office or the bank?
- Have you ever sent an employee to pick up a fellow coworker at the airport or drop them off after work?
- Have you sent an employee to pick up lunch or supplies for the company?
- Have you ever rented a vehicle while on a business trip or attending a convention?
- Do you provide an allowance for business use of an employee’s personal vehicle?
If an employee has an accident under any of the circumstances described above, your company may be held liable and could be sued for damages.
In most cases, your commercial auto policy will not help because it only covers employees while they are operating company-owned vehicles. And if you have no company-owned vehicles, you’re most likely under the impression you’re home free. Perhaps you think your employee’s auto insurance will pick up the tab. Unfortunately, the company may be at fault if the employee is conducting company business.
What do you do?
The best protection is a non-owned and hired automobile liability policy. This coverage will assist if an employee is involved in an accident while using their own vehicle (or a rented vehicle)* and your company is found legally liable. Yes, the employee’s insurance will typically be the primary insurer for both the employee and your company if the vehicle was being used for company business. But…
The employee may only carry limited coverage and often damages or even lawsuits exceed those limits. In that case, remaining expenses would be passed on to your company as the secondary insurer.
Have you checked your current coverage lately?
It’s always best to check with your insurance provider to see if you have coverage for non-owned and hired vehicles under your current policy. If not, a standalone policy is affordable and transfers this potentially costly exposure to your insurance provider instead of your company.
Understanding your insurance policy is an important part of your coverage and can affect how you do business, what internal procedures you follow, what topics are covered in employee onboarding, and a host of other issues. It’s important to ask questions when you are purchasing new coverage or renewing your current policy. Part of your insurance carrier’s job is to ensure you understand what you’re paying for, and that what you’re paying for will actually provide the protection you need.
*Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
Dan Tharp is licensed in all states (except Alaska & Hawaii) and is the Vice President of Business Insurance Lines for Pearl Insurance. Dan has been assisting business owners in protecting their operations, customers, and employees for over 30 years. For questions regarding this blog post or any other insurance matter, he can be reached via phone at 800.447.4982 or email at [email protected].
