Most companies allow employees to use company vehicles for personal use. It could be checking on your child in the middle of the day, buying groceries, or driving to the grocery store using the company’s truck.
While driving a company car allows you to make some savings, you may be in a complicated situation in case of an accident. Establishing the liable party when an employee has been involved in an accident is unclear.
In addition, you may be personally liable if coverage gaps exist when driving a company car with your insurance. Consider speaking to an experienced auto insurance agency about your coverage options to minimize liability.
While you can consider buying a personal auto insurance cover, it has exclusions. The terms of personal auto insurance coverage state that the policy doesn’t extend to vehicles furnished and availed for personal use.
Therefore, you do not have insurance coverage when driving an employer-owned vehicle for personal use, irrespective of the private auto insurance. The same lack of protection applies if a spouse or a family member uses the car.
Typically, commercial auto insurance would cover the incidence; however, since the employee was off duty, they’re not protected.
Fortunately, you can cover this little-known gap by acquiring an endorsement on the personal auto insurance policy known as Extended Non-Owned Coverage for Named Individuals. More importantly, each family member should be named to the policy if there is a chance of driving the company vehicle.
The role of the endorsement is to offer liability coverage but doesn’t offer physical damage coverage to the vehicle.
If the company refuses to accept an extended non-owned coverage for named individuals, you can buy a Named Non-owned policy to fill the coverage gap. In effect, you enjoy added protection to your auto insurance but at an added cost.
You may also consider extended non-owned protection because employee-to-employee legal suits are becoming more common. Many courts are allowing employees to sue fellow employees who injure them in the course of work.
Unfortunately, the employee’s auto insurance excludes the business use of a truck and other company vehicles. Similarly, a few employer’s policies exclude bodily injury to a fellow employee, which leaves the worker without protection in both instances.
However, you can fill this potentially dangerous gap by endorsing the employee’s policy with extended non-owned coverage.
The scope of coverage in a business auto insurance could be broad or narrow depending on the company’s needs. For instance, it could be written to apply to one particularly described auto. In the case of broad coverage, the policy could be drawn to apply to the named persons’ liability, which arises from using an auto.
In a nutshell, you have three options for the vehicles you choose to cover:
In most cases, businesses acquire the third option because it offers comprehensive coverage that protects them from liability when an employee or owner is driving a personal vehicle for business.
When an accident occurs, the insurer is interested in knowing who caused the accident as part of the investigation.
Here are a few situations where an employee may be at fault for an accident:
Employers are financially and legally liable for damages caused by an employee while driving a company’s vehicle. In most cases, the company’s insurance coverage relieves the employee from having to pay personally for the damages.
A company can allow their employees to use vehicles for personal use if the business auto policy has appropriate ‘’auto coverage’’ symbols. On the ‘’declaration’’ page, it should be well labeled that you have coverage for owned autos taken home by workers.
In other instances, an employee or company executive is supplied with the only company car. The employee does not own the vehicle, and neither do they have personal auto insurance. Consequently, the business auto insurance coverage doesn’t apply to the personal use of such a vehicle.
You can close the coverage gap by adding drive other coverage to your business auto insurance coverage. Consequently, it provides coverage as the named individual or a family member drives the car borrowed from a third party.
Personal auto insurance provides better coverage that individuals face when driving using a business vehicle for personal use. It is unlike business auto insurance, which primarily caters to business-related accidents.
If an employee doesn’t have coverage on another vehicle they own, they may consider buying furnished car coverage. Alternatively, the company can buy the ‘Drive Other Car Coverage’. Although it doesn’t offer much protection as a personal auto policy, the company gets the protection to drive a vehicle they do not own.
If you injure a pedestrian while driving a company car, the victim may sue you for damages. While the company’s insurance can cover the cost of the injuries, there are possible gaps that could expose you.
To that end, consider buying an additional package connected to your business auto insurance package to minimize liability.
At Panorama Insurance Agency, we work with multiple insurers to give you the right auto insurance package that meets your personal and business needs.
Contact us online or call us at 818.658.2867 to get a free quote.