Liability Risk with Employee Owned Vehicles

With over 20,000 mobile users we realize that many of our clients handle employee owned vehicles differently. We asked leading Property and Casualty insurance provider Swingle Collins for some insight on how best to protect your organization for liability.

Chris W. Peterie | Swingle Collins | cwp@swinglecollins.com

Companies know that there is liability risk if they own an auto fleet. Most business owners do not know that they have auto exposure even if they do not own any vehicles. If your company has sales people or if your employees even run simple little errands like going to the post office or bank, your company can be exposed to non-auto risk. Most company do not consider that they can be exposed when their employees rent (hired auto) cars for their business. This article explains the business auto risk and how a company can avoid the risk.

Questions a company should consider:

• Do any employees use their personally owned vehicles to run errands for company business?

• Do employees drive their own vehicles to visit clients or patients?

• Do volunteers use their own vehicles for the organization’s work?

• Do employees drive their vehicles to business meetings, visit customers, deliver supplies or parts?

If yes is the answer to these questions, you have a non-owned automobile exposure. Businesses have a non-owned auto exposure anytime someone uses their personal vehicle on behalf of their company.

The company’s exposures:

If an employee creates liability in their own vehicle, the negligence employees’ personal auto policy responds in a primary position to the loss. When the employee’s auto policy limits are exhausted the

company’s auto policy will respond, The courts could find your company liable under the theories of negligence or vicarious liability.

There are things that you can do to protect your business from non-owned automobile exposure such as:

• Allow only certain employees to conduct business with personal vehicles.

• Annually, Review your employees’ Motor Vehicle Record (MVR) before they are allowed to drive.

• Any employee who drives their personal vehicle for business must be required to show proof of insurance with a minimum of $300,000 combined single limits.

• Employees that drive for your company should require that your company be named as an additional insured on their personal auto policy.

• Inspect employees’ vehicle to assure it is properly maintained and safe to operate.

• Investigate all accidents and provide training to prevent future accidents.

• Establish safety rules for drivers of non-owned vehicles like texting policies.

• Provide training for non-owned vehicle drivers.

• Document your company’s policies to control the non-owned auto exposure.

• Establish criteria for what is acceptable for your employees to drive.

There are a lot of loss control options to help your company avoid non-owned auto losses. Make sure your companies deploy as many as possible to protect your organization.