Fact or Fiction? When employees run business errands, they are covered by their own auto insurance

Published on Tue, 08/13/2013 - 16:48

In this tough economy, the last thing business owners need is an unexpected surprise that threatens the bottom line. However, that’s exactly what business owners could face if they fail to separate fact from fiction when it comes to commercial auto insurance. 

For example, let’s say you send an employee out on a business-related errand and he drives his own private vehicle. Along the way, he gets in an accident that causes damage to the other driver’s vehicle and badly injures the driver. That driver is now suing for medical bills, lost wages and pain and suffering. The costs are estimated at $67,000. Are you covered?

That depends on whether or not you’ve bought into this common myth:

Myth:  You’re safe because the employee’s personal auto insurance will cover the liability.

Reality: Most personal auto policies exclude coverage for using a vehicle for business purposes. And how do you know that your employee isn’t driving uninsured without your knowledge? That could be double trouble.

The same holds true if your employee was driving YOUR personal vehicle. Many business owners believe that if the vehicle is registered in a personal name and not the business name, the personal auto policy will provide coverage. This is another dangerous myth that could set you up for a costly surprise.

How do you make sure you’re covered?

Avoid costly surprises by securing non-owned and hired auto liability coverage. This coverage will pay for bodily injury and property damage caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees) or caused by a vehicle you hire (including rented or borrowed vehicles).

In the past, some business auto policies automatically included this coverage, but that’s no longer the case. In recent years, insurers have been severely limiting this coverage or requiring that it be purchased as a rider or endorsement. So never assume that your regular business auto policy will cover you.

Non-owned and hired auto liability coverage is good to have for a variety of everyday situations, such as …

• Sending an employee to pick up supplies or lunch
• Renting a car while on a business trip
• Sending a limo to pick up an important client or business guest

The facts:

If you have employees who might use their personal vehicles for work, or if you rent or borrow vehicles for your business, you need non-owned and hired auto liability coverage. Whether you need a basic commercial auto policy or comprehensive fleet insurance, Heffernan Insurance can customize your business auto coverage to make sure you’re protected, no matter what surprises are around the corner.