Non-Owned Auto Coverage Essential for Any Business
Posted by DSD Insurance an Acrisure Agency Partner on
Even businesses that own fleets of autos sometimes use vehicles that do not belong to them. Often, you may ask an employee to run an errand or visit a customer or vendor using their own car.
Your business may be legally liable for anything an employee acting on its behalf does while behind the wheel. Lawsuits and accompanying legal costs may await your business if they have an accident, putting the assets of your company at risk of loss in a lawsuit.
Many business automobile insurance policies cover this situation, but they do not do so automatically. All business auto insurance policies issued by DSD Insurance offer and include this highly desirable coverage.
The usual Insurance Services Office business auto policy uses numbered symbols to identify covered autos for each coverage the business has purchased. The policy provides liability coverage for non-owned autos only if symbols 1 or 9 are shown on the information page:
Symbol “1” means “Any auto.”
This is the broadest designation and covers any auto, including borrowed, hired, owned or leased. Symbol “9” means “Non-owned autos.”
The policy defines non-owned autos as vehicles the insured business does not own, lease, hire, rent or borrow and that are used in the business.
The latter term includes autos owned by your business’s employees; partners (if the business is a partnership); members (if it is a limited liability company); or members of their households.
However, coverage applies ONLY if the vehicle is used in the business or in the policyholder’s personal affairs.
Scenario: Your company has run out of paper and a worker is asked to go to an office supply store to purchase supplies. She drives her personal vehicle to run the errand. On the way back to the office, your employee collides with another car going the opposite direction.
If your auto insurance policy’s information page has either symbol “1” or “9” for liability coverage, it will cover this accident, including the costs associated with:
• Physical Damage to the other vehicle . . . (NOTE: it does not pay for collision damages to the hired
or non-owned vehicle),
• Medical expenses . . . for injured third parties, and
• Legal defense expenses . . . arising from the accident.
If the policy has another symbol, it will not cover an accident resulting from the use of the employee’s vehicle.
For companies that do not own their own vehicles but have employees drive their own vehicles for work or rent them when on business . . . this type of coverage is essential.
It is possible that the employee’s personal auto insurance policy may provide some coverage for the employer. However, you should not assume that this is guaranteed.
In the event of an accident, you could be found negligent for various reasons including, but not limited to:
• Your employee’s insurance has lapsed and is not in effect at the time of an accident
• Your employee only carries the minimum limits required by the state, and the amount of damages your company may be liable for exceeds this limit
• Your employee’s vehicle is not properly maintained
• Your employee’s driving record is below standard
• Your company does not have any fleet controls or policies in place to address these issues with employee vehicles that are used for business purposes
If the accident liability exceeds your employee’s policy limits, the damaged third party will turn to your company next. With no non-owned auto or “all vehicles” coverage, your company could be on the hook for any damages out of your own (company’s) pocket.
Almost every business has situations where it asks an employee
to use their personal vehicle for business.
When your company does this, an uninsured loss can be financially devastating and also . . . very easily avoided.
“All autos” and “non-owned auto” insurance coverage protects your business by covering potential coverage gaps that can easily put your company’s financial stability in peril.
Call us at 866-621-1770 to learn more about this coverage that every business needs.