It is inevitable that at some point, an employee will use their own car to run a company errand. Perhaps a package needs to be shipped immediately, a bank deposit needs to be made or you simply ran out of coffee. The scenarios are endless. So, the question is.... Is your business covered while employees are driving their own car on company business?Like most things in insurance - it depends.
Is employee "covered" by the company's commercial auto policy while driving their own car on company business?
"Covered" is a broad term and can mean multiple things. Is the business covered? Is the employee's car covered while running a company errand? Is the employee covered for an injury they sustain while driving on company business? Is the property damage or bodily injury sustained by another party, but caused by the employee while driving on company business covered?
Just because a business has a commercial auto policy does not mean that it will extend to a vehicle owned by an employee, regardless if used in business or not. Commercial auto insurance can be written to address the various coverage needs of any company. As companies vary significantly from sole proprietors to large corporations with vehicle fleets, it is important to communicate with your insurance professional the specific needs of your business.
Coverage may extend from a commercial auto policy to an employee's vehicle while they are running a company errand, but only if the commercial auto policy is written to include all autos used for business, including those that your business does not own, hire or lease.
It is strongly advised that business owners speak with an insurance professional to discuss the particulars of your business and how cars are used to ensure the proper coverage is in place for the many scenarios.
Is employee covered while driving their car on a company errand if business has worker's compensation?
Worker's compensation protects the employee if injured from a work-related accident or death, so the employee's injuries would most likely be covered if in a car accident on company time. That said, worker's compensation only extends to the injuries of the employee. It does not extend to damages or injuries of a non-employee, any resulting property damage or damage to the employee's vehicle.
How can a company be protected for an employee using their own car in the course of business if no commercial auto policy is in place?
Hired and Non-Owned Auto Insurance can be purchased either on its own or added as an endorsement onto a general liability policy. It is designed to cover the liability expenses for accidents involving vehicles that your business uses for work purposes but does not own.
An example would be that an employee runs to Staples to pick up paper, but backs into a car. The owner of the other car sues the driver, as well as the business for damage to the car. Hired and non-owned auto insurance may cover the damage to the other vehicle; however, it would most likely not cover the physical damage to the employee's car.
Again, speaking with an insurance professional is critical given the potential risk involved and many nuances with coverage.
What if employee is injured during commute?
Commuting is typically outside the responsibility of the business so hired and non-owned, workers' compensation and drive other car coverage would not typically extend to an employee simply commuting to or from work.
Will coverage extending from a business prevent an employee from being sued individually?
The short answer is no. If there is an accident resulting in injury or property damage caused by an employee driving their own car on company business, all parties (the driver, owner of vehicle and the business) can still be sued.
What can a business do to decrease the risk of a lawsuit from an employee driving on company time?Even if your company has all the proper insurance protection in place, the best way to decrease the changes of being sued, is to avoid having an accident in the first place. Though accidents happen outside our control, some can be prevented by following some simple guidelines.
- Ensure all employees who drive for you are properly licensed
- Require random motor vehicle record checks
- Establish a written driver policy, including cell phone usage, eating while driving and prohibit alcohol consumption before driving company vehicle.
- Ensure owners and managers of company buy-in and adhere to all company driving policies.
As you may be held responsible for the actions of an employee behind the wheel, it is critical that you understand how your commercial insurance will (or will not) respond. Contact HPM Insurance today to discuss the various scenarios your business could face with employees driving their own vehicles and ensure your business is protected.