If you have a small business, your employees might have to use their own personal cars in the course of their jobs. They might meet with clients, pick up supplies, run errands for your business, or attend conferences. Even though your employee is driving their own car with their own auto policy, they’re only driving because they’re conducting business for you. If you have commercial auto insurance, you might think you’re covered.
But there’s 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 is where another kind of auto insurance – hired and non-owned auto coverage – comes in to protect your business if you’re found to be at all accountable. Let’s take a look at 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 get into a car accident while doing business for you. They have personal auto insurance, of course, and that will usually provide primary coverage, meaning it’s the first insurance that will kick in. However, the costs of the accident could go above the limit on the employee’s personal auto policy. In that case, liability would then be passed to the employer. Unless you want to wind up footing the rest of the bills out of your business’s pocket, you might want to consider hired and non-owned auto insurance. Plus, your business could be sued for additional damages if there’s 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 hire or a vehicle that your company doesn’t own. This covers rented vehicles and vehicles owned by others – including your employees! Usually, you can just add it to your commercial auto policy, but if you don’t have commercial auto insurance you can probably add it to your general liability insurance.
Which vehicles are eligible for hired and non-owned auto coverage?
Now, keep in mind that hired and non-owned insurance provides liability coverage for when an employee drives their car for business. That means that the car cannot be owned or registered in the business owner’s name or be at all associated with the business.
Normally, personal auto insurance policies will cover general business use, like visiting clients, picking up supplies, or attending meetings or conferences. However, an important exception to note is livery, or delivering/carrying goods (or people) for a fee. That means pizza or food delivery, flowers, retail items, and chauffeuring.
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 going to be using the vehicle for to make sure that they have the proper coverage. Some policies are stricter than others, and some have exceptions allowing business use for certain vehicles. But it’s kind of case-by-case. Your employee and you have to be on the same page to make sure that any claims will be covered.
How can I reduce my risk?
Insurance is all about reducing risk. To help reduce your business’s risks when you send your employees off into the world…
1. Review driving records.
Check on your drivers’ MVRs and personal auto policy coverages. Make sure that everyone is sufficiently insured before letting them get behind the wheel.
2. Establish standards for personal vehicles.
The cars that your employees are driving for your business should be well-maintained. You should have guidelines in place to define which vehicles are appropriate for use. You might also want to consider collecting maintenance reports periodically.
3. Put policies in place outlining safe driving expectations.
It might seem common sense that your employees shouldn’t drink and drive or text and drive, but you should have a strict policy that outlines it anyways. It needs to be very clear that you expect good driving habits from your employees.
4. If your employees have to rent a car, lay out some guidelines.
If your employees ever have to travel and rent a car for your business, you need to lay out the guidelines for what they need insurance-wise. It might help to have a relationship with a particular agency that works well for you.
Letting your employees drive their own vehicles for business purposes is a risk for your business, so you need to make sure that you have the right insurance behind you to cover any potential claims or accidents. Don’t assume that your employees’ personal auto insurance will protect them (and your business) full. Consider hired and non-owned auto insurance to boost your level of protection. Small businesses need to avoid gaps in business insurance coverage as much as possible.
If you’d like to get a free quote for your business insurance, we’d love to help you out with that! We know that insurance can be overwhelming, so we’ve made one of our goals to make the insurance process as easy as possible. All you have to do to get started with your free quote is fill out our quote form or give us a call today!