Blind Spots in Commercial Auto Coverage

Could you see your company ever facing this scenario?

An on the job employee is in his or her own car headed to the Post Office to pick up company mail, or the bank to make a company deposit, or the office supply store for business supplies, or a sales presentation…and is involved in an auto accident. Your employee hits another vehicle and is found at fault for the accident.

If something like this happens, is your company liable? If so, do you have insurance coverage for such a claim?

To make this simple, let’s start with a minor claim scenario. We will assume the employee hit an unoccupied parked car and the damage is minimal.

In this case, the employee’s own auto insurance should respond first, and will likely be the only policy to respond. It will cover the cost of the damage to the parked car through the Property Damage Liability coverage section of that auto policy.

I would call this a “near miss”. You dodged a bullet. The claim is covered and your company is left whole. But what must your company do to ensure protection assuming a similar scenario?

If you have employees driving on any company business, then your company needs to employ a tracking system that confirms each driver does in fact have a valid driver’s license AND, if they are driving their own cars, then it is recommended that you also verify that they have valid auto insurance, and you might even establish a minimum liability limit. For example: Bodily Injury limits of $100,000 Per Person / $300,000 Per Accident and Property Damage Limits of $100,000

Additionally, I recommend that you reassign employees away from driving responsibilities, should an employee have more than 2 minor violations in the last 3 years or any major violations in the last 5 years.

Now let’s look at a major claim scenario. Imagine a terrible claim where people in the other car are seriously hurt or perish as a result of the accident.

Here, we expect to see attorneys involved. When it is discovered that the driver was an employee driving on company business, then your company will be added as a defendant to the lawsuit. This is an easy justification, as company business was the reason your employee was driving that day.

The employee’s auto insurance policy protects just the employee. So, what policy provides liability protection for your company?

For most companies we can cover this “Non-Owned” auto liability exposure in either of the following 2 ways:

1) If your company has company owned vehicles, then we can include symbol 1 (one) on the Commercial Auto policy. Symbol 1 provides liability coverage to Owned Autos, Hired Autos (think rented) and Non-Owned Autos (think employee owned autos).

It’s important to remember that this is just liability coverage. Liability coverage protects company assets from a claim brought by a third party. In this case the policy does not pay to repair damage to the employee’s vehicle.

2) If your company does not have company owned vehicles, then we can add “Hired and Non-Owned Auto Liability” coverage to the General Liability policy. This endorsement is usually $200 – $300 annually and has the same per occurrence liability limit as your GL policy.

Our final take away is this: The risk of Non-Owned auto liability can be a blind spot for many small business that do not have company owned cars, or for those who do not consider themselves as a company that has employees that drive every day. Fortunately, there are cost-effective insurance solutions available to protect your business from these blind spots.

To talk to an insurance professional about this or any other insurance needs, call Beehive Insurance today at 801-685-6876.

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