Non-Owned Autos

What employers need to know

When Employees Drive for Work

If employees use their personal vehicle while working, your business could be responsible if an accident occurs.

Common work-related driving may include:

Visiting clients
Traveling between worksites
Attending trade shows
Running business errands
Delivering items
Going to the bank or post office
Picking up food or supplies

Two Angry Motorists Arguing Over Responsibility For Car Accident

As an employer, you may be held vicariously liable for an employee’s actions while they are on the job. This means your business could be responsible for damages if an employee causes an accident while driving for work.

Hired and Non Owned Auto Coverage

Hired and Non Owned Auto Coverage helps protect your business when employees drive vehicles the company does not own.

Hired Auto Coverage may apply when:

An employee drives a rented vehicle
An employee drives a borrowed vehicle
The company or driver does not own the vehicle

Non-Owned Auto Coverage may apply when:

Employees use their personal vehicles for work
An accident happens while they are driving for business purposes
The employee’s personal auto insurance responds first

Your company’s policy may help provide additional liability protection after the employee’s personal auto coverage is used.

Preventative Measures

Have a written company policy in place for employees to sign and review annually

Safe Driving Expectations

Employees are expected to drive safely and responsibly while on the job.

Employees should not:

Drive while intoxicated
Drive under the influence of controlled substances
Text, talk on the phone, or use electronic devices while driving

If an accident occurs, the employee should notify their employer immediately.

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

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

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”

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

Options for Protection

Business Auto Plan (BAP)

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”.

Business Liability

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.

Personal Auto Insurance

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.