When it comes to protecting your business from potential automobile exposures, you may be under the false impression that a standard Commercial Automobile Policy (BAP) is the only type of coverage needed for vehicles owned or rented by your company. However, should an employee become involved in in an accident when driving their own vehicle or a rented one while on the job, who would be held responsible? If a lawsuit was to arise from the accident, would your BAP protect you? These two situations represent a “grey area”, and the only solution is a Non-Owned Business and Hired Auto Insurance policy.
Non-Owned Automobile liability: This specific coverage provides vicarious liability for a business in case a lawsuit arises from an auto accident occurring while an employee is using his or her personal vehicle for work purposes. The Non-Owned policy protects only the company; not the employee. Also, it is important to note that Non-Owned liability is not automatic; the BAP policy must be endorsed to provide this coverage.
Hired Automobile Liability: Hired Auto protects your business if an accident occurs while an employee is driving a vehicle that has been rented or leased in your companies’ name. (Usually, this policy will NOT cover vehicles rented or leased in an employee’s name).
When it comes to the physical damage of the rented or leased vehicle, there are two options to protect your company: purchase the coverage from the rental company or purchase a rider from your BAP.
When you need Non-Owned or Hired Auto Liability: Basically, anytime an employee is considered “on the clock” (Driving to and from work and lunch breaks are not considered “on the clock”), your business can be held liable for any damages or injuries caused by an automobile accident involving your employee. Some variables business owners should consider are:
• Do you require employees who use their personal vehicle to provide you with evidence of personal insurance? If so, do you require minimum limits of liability?
• Do you annually review driving records of employees who use a personal or business vehicle for work purposes?
• Does your employee handbook address ramifications of a poor driving record?
Whether your employees use their own vehicles, you drive a rental for business trips, or you have short term rentals to move property, this type of exposure is definitely one your business will want to address.