Understanding Non-owned and Hired Automobile Liability Coverage
Issue #51
April 14, 2008
Does your business have potential automobile loss exposures that you are not aware of? You’ve taken all of the necessary steps to ensure that your own fleet operation is properly covered in the event of an accident. But what about the loss potential that arises from individual employees who operate their own personal vehicles for company business?
There are many situations that present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles.
• Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
• Do you occasionally send an employee to pick up a visiting client at the airport?
• Have you sent employees to pick up lunch, drop off mail, or pick up office supplies?
• Have you ever rented a vehicle while on a business trip?
• Do you have a sales force to which you provide a car allowance for business use of their personal vehicles?
If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business. Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company if found legally liable. Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using her own vehicle on company business. The business’s non-owned and hired automobile liability coverage provides excess coverage: if no coverage exists, the business is vulnerable to potentially costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
Kempkey Insurance Services goes beyond insurance by designing and implementing risk management programs for growth oriented businesses. We help our clients maximize the value of their insurance dollars and minimize their potential for unwanted surprises. Ed Kempkey can be contacted at (888) 536-7539 extension 2188, or at ed@kempkey.com .