NON-OWNED AUTOS
What employers need to know
Do you have employees that drive their own autos for business?
Sales Calls – Visiting Clients – Traveling between Worksites – Trade Shows
Running Errands – Delivering items – Bank/Post Office – Picking up food – Etc.
You are responsible for your employees activities while they are on the job. You could be held vicariously liable (liable for their unlawful actions) if they were in an accident.
What is Hired/Non-Owned Coverage?
Hired auto coverage protects you in situations where the company or the driver doesn’t own the vehicle, like if an employee is driving a borrowed or rented car.
Non-owned auto coverage protects your company from liability when employees use their own cars for work. If an employee gets in an accident, their auto insurance will be activated first, and the company policies can supplement it.
Preventive Measures
Have a written company policy in place for employees to sign and review annually
- Employees shouldn’t be driving if they’re intoxicated or using other controlled substances that could impair their ability to operate a vehicle.
- Employees won’t text, talk on the phone, or operate any electronic equipment while driving.
- If an accident occurs, the employee will immediately let their employer know about it.
Keep CURRENT documents in Employee files
- Current Drivers License
- Motor Vehicle Inspection
- Proof of Insurance showing Business Use Endorsement and Proper Liability Limits
Update files annually
Set Requirements for Personal Insurance Limits
- Have a “Business Use Endorsement“
- Have proper liability limits
- no less than 100/300/100
- 250/500/250 recommended
Review MVR Report
We would advise prospective employee to sign authorization to grant permission to run MVR report.
- Set up an account at the DMV Website – $200 set up + $14/report.
- OR check with your Payroll Vendor for MVR Tool
- Confirm no “red flags”
Options for Protection
A Business Auto Plan (BAP) covers vehicles owned by the company. Most plans require a minimum of 1 Owned Auto to set up the plan.
DON’T HAVE OWNED AUTOS? If you are the owner of the company, you may want to consider having the company own your auto if it is being used for work related purposes (please note additional considerations are necessary if you are not also listed as a driver on a Personal Auto policy).
Hired/Non-Owned Auto Liability coverage can be added to a BAP plan; however, many companies have restrictions that only cover “incidental use for business”.
Many Business Owner Plans (BOP) or General Liability Plans allow for a Hired/Non-Owned Auto Liability Endorsement.
This may be a good option if your company has no Owned Autos.
Many companies have restrictions on the amount of driving that an employee does for the business. If it is more than incidental, the company may not offer the endorsement.
Any employees that drive their personal autos for business purposes should add a Business Use Endorsement to their Personal Auto Policy.
Best Practices would be for the business owner to request and file a copy of each employee’s Personal Auto Dec Page showing the Business Use Endorsement.
Mileage reimbursement is typically provided to employees that use their personal vehicles for work to help cover wear and tear and additional insurance expenses.