Employees often use their own personal vehicles for business purposes. As auto rates increase you may want to think about what happens when an employee driving their car for business, gets into an auto accident.
Knowing what your Hired and Non Owned Automobile coverage does and does not cover for your business can be critical. This important coverage expands your automobile liability to vehicles that are not owned by the business but are used for business purposes.
For example, what if an employee hits a school bus, injures multiple children, damages the school bus and their own car while out on business on your behalf?
First let’s talk about what coverage is applicable. While your liability is extended when your employee is driving for the business, the primary coverage on the employee’s vehicle is the employee’s auto insurance.
Meaning, your employee’s insurance pays first but if their limits are insufficient and your company is named in a suit, than the Non Owned liability will protect the company. It will pay damages for bodily injury and property damage up to the limit of the policy for that accident, beyond whatever the employee’s policy paid out. That is a huge relief. Additionally, if you have umbrella liability, those limits are available to extend that protection.
It will not pay for damage to the employee’s car. It is the responsibility of the employee to fix their own car with their own policy.
The only physical damage you can purchase for vehicles you don’t own is Hired Car physical damage applicable to rental situations. This can be added to your policy as an endorsement and covers rented cars used for company business.
Remember, your coverage under Non Owned is secondary to the employee’s own coverage. To mitigate risk, we recommend to proactively check employee driving records of those individuals who frequently use vehicles for company business. You might also consider setting guidelines about the limits of insurance they carry as part of your risk control program.
Non Owned and Hired vehicles can present serious liabilities but with understanding and the right coverage you will be protected.