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
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.
What is Hired/Non-Owned Coverage?
This 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
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.
