Reduce Your Liability Exposure from Non-Owned Automobiles
A basic business auto insurance policy will only cover employees while they are operating company-owned vehicles to perform company business. But do you need coverage for employees who might use their personal vehicle to perform company business? Do you have a sales force that regularly goes out on sales calls using their own vehicles? Do employees run errands, such as making bank deposits or purchasing office supplies?
Did you know that if the employee gets into an accident in these types of situations, your business can be held accountable and sued for damages?
A non-owned automobile is a vehicle that you or company does not own, lease, hire, rent or borrow that is used to perform business activities. Typically this would be an employee-owned vehicle driven by the employee on company business. And any time an employee uses a personal vehicle to perform tasks on behalf of your business, the business can be held liable.
The employee’s personal automobile insurance should cover claims related to using his or her auto for business purposes. However, some insurance companies exclude business use from coverage. Either way, you need insurance to cover claims that exceed the limits of the employee’s personal auto policy, or to provide coverage when the employee’s auto insurance excludes business use.
A basic business auto insurance policy will only cover employees while they are operating company-owned vehicles to perform company business. And even if an employee’s personal auto insurance policy provides coverage, a gap exists if the personal auto policy excludes business use or if the employee’s auto insurance limits are not sufficient.
Non-owned auto liability insurance protects your company if you are sued as a result of an automobile accident that you or your employee has in a personal vehicle while on company business. It covers bodily injury and property damage caused by a non-owned vehicle being used to perform activities for your business.
Typically you can add non-owned auto liability coverage to your business auto policy. If you do not have a business auto policy, you can usually add non-owned auto liability coverage to your general liability policy.
Even if you have insurance, risk management practices are the best ways to reduce the exposures faced by your business. You might want to consider a complete ban on the use of personal cars for business purposes. But if that is not feasible, consider implementing the following rules and procedures.
- Obtain motor vehicle records (MVRs) for employees who use their own vehicles for business. If you wouldn’t let the employee drive a company-owned vehicle, don’t let him use his personal vehicle for your business, either.
- Keep a copy of every driver’s valid driver’s license.
- Require employees who use personal autos for business purposes to carry adequate personal auto insurance. Obtain a certificate of insurance from these employees showing that your required limits have been met.
- Include all non-owned auto drivers in driver safety and training programs. All drivers, whether they are driving a company-owned or personal vehicle, should be following the same procedures for safe driving.
Implementing risk management procedures and making sure you have non-owned auto liability insurance protects your business and your employees. Without it, your business can be subject to significant losses and a variety of increased expenses. Do you have the right kind of business auto liability insurance? Have you added non-owned auto coverage to your business auto policy?