But there is a catch – commercial auto policies only protect you when employees are driving a work-owned vehicle for company business. It doesn't apply to an employee's personal vehicle. This really is where another kind of auto insurance – hired and non-owned auto coverage – comes in to protect your business if you're found to become at all accountable. Let’s check out hired and non-owned auto insurance.
Why would my business be held accountable for an employee driving their own car?
Okay, here's the deal – your employee could enter into a car accident while doing business for you. They've personal auto insurance, of course, and that will usually provide primary coverage, meaning it's the first insurance which will kick in. However, the costs from the accident could go above the limit around the employee's personal auto policy. In that position, liability would then be passed to the employer. Unless you want to wind up footing the rest from the bills out of your business's pocket, you might want to consider hired and non-owned auto insurance. Plus, your business might be sued for additional damages if there is a bad accident.
What is hired and non-owned auto insurance?
Hired and non-owned auto insurance covers the costs of bodily injury and property damage that are caused by a vehicle that you simply hire or a vehicle that your organization doesn't own. This covers rented vehicles and vehicles owned by others – including your employees! Usually, you can just add it for your commercial auto policy, but without having commercial auto insurance you can probably add it for your general liability insurance.
Which vehicles are eligible for hired and non-owned auto coverage?
Now, bear in mind that hired and non-owned insurance provides liability coverage for when an employee drives their car for business. Which means that the car can't be owned or registered in the business owner's name or be at all associated with the business.
What do my employees have to know?
You should encourage your employees to speak to their insurance providers to clarify their policy on business use. Your employee should explain to them exactly what they're likely to be while using vehicle for to make certain that they have the proper coverage. Some policies are stricter than others, and some have exceptions allowing business use for certain vehicles. But it is kind of case-by-case. Your employee and also you have to be around the same page to make certain that any claims will be covered.
How can I reduce my risk?
Insurance is about reducing risk. To help reduce your business's risks when you send your employees off into the world-
Check on your drivers' MVRs and personal auto policy coverages. Make sure that everyone is sufficiently insured before letting them get behind the wheel.
The cars that your employees are driving for the business should be well-maintained. You ought to have guidelines in place to define which vehicles are appropriate to be used. You may also wish to consider collecting maintenance reports periodically.
It might seem common sense that your employees shouldn't drink and drive or text and drive, however, you should have a strict policy that outlines it anyways. It must be clear that you simply expect good driving habits from your employees.