If you rely on your employees using their personal vehicles for work, it may feel like a simple solution for getting your employees to job sites, making deliveries, visiting clients, or just running errands on behalf of your company.
Unfortunately, in the event of an accident involving an employee-owned vehicle on company time, insurance coverage is anything but straightforward. Serious insurance gaps may put your business at risk.
Let’s take a look at the hidden risk of employee-owned vehicles and how the agents at Stein Insurance can make sure you and your business are properly covered.
The Hidden Risks of Employee-Owned Vehicles
If you think that your employees’ personal auto insurance will cover any accidents that occur when they are performing work duties, think again.
Personal auto policies are designed for personal use, not business operations. If the driver is performing work duties when an accident occurs, their insurance company may limit coverage, deny part of the claim, or refuse coverage altogether.
What’s more, even if your employee’s insurer does respond, your business can still be held liable for damages caused while your employee is working.
When Businesses Can Be Held Liable for Employee-Owned Vehicles
Your business may be held responsible if your employee causes an accident while performing job-related duties. These may include:
- Driving to a client meeting
- Transporting tools or equipment
- Making deliveries
- Traveling between job sites
- Running company errands
This type of liability is called vicarious liability. It can expose your business to lawsuits and costly claims if your insurance coverage doesn’t protect you from these types of risks.
Hired or Non-Owner Auto Coverage for Employee-Owned Vehicles
Fortunately, Stein Insurance agents can provide a solution for you. Hired or non-owned auto coverage protects your Minnesota or Wisconsin business when employees use their personal vehicles for work purposes. These policies include coverage for bodily injury liability and property damage liability as well as legal defense costs if your business is sued in the event of an accident.
Hired or non-owner auto coverage protects your business, not your employee’s vehicle. That responsibility remains with your employee’s personal auto policy.
How to Protect Your Business from Employee-Owned Vehicle Liability
Purchasing hired or non-owner auto coverage is a great first step toward protecting your business from employee-owned vehicle liability risks. But it’s not the only step.
Establish a Company Vehicle Policy
At Stein Insurance, we also recommend that you create a company vehicle policy that stipulates your requirements and expectations for employees who use their personal vehicles for work duties.
Require proof of personal auto insurance before you allow your employees to use their personal vehicles for work duties. Consider establishing required minimum liability limits for your employees, such as $100,000 per person, $300,000 per accident, and $100,000 property damage. Require your employees to update their proof of insurance annually.
Additionally, include your safety expectations, restrictions on distracted driving, and what constitutes an acceptable driving record for new and current employees. Check driver records against your state’s motor vehicle records. This will identify drivers with excessive violations or high-risk histories.
Switch to Company-Owned Vehicles
If your company relies heavily on employee vehicles to help them perform frequent work duties, it may be safer to invest in your own fleet of company-owned vehicles. That way, you can insure the vehicles under a commercial auto policy. Your Stein Insurance agent can help you decide the type of coverage you need.
Employee-owned vehicles are a common part of doing business, but that doesn’t mean they need to be a liability risk for your company. The independent agents at Stein Insurance can help you understand your risk and protect your business and your financial future.
If you currently rely on employee-owned vehicles or plan to in the future, contact Stein Insurance for expert advice and comprehensive insurance coverage that gives you peace of mind.
Employee-Owned Vehicle Insurance FAQs
Does my business need insurance if employees use their own vehicles for work?
Yes. Even if employees drive their personal vehicles, your business can still be held liable for accidents that occur while they are performing job-related duties.
What is hired and non-owned auto insurance?
Hired and non-owned auto insurance helps protect your business from liability claims if employees use personal vehicles for work purposes.
Does hired and non-owned auto insurance cover damage to the employee’s car?
No. These policies typically only cover liability for bodily injury or property damage caused by the employee while driving for work. Damage to the employee’s vehicle is handled by their personal auto policy.
What steps should businesses take to reduce risk when employees drive their own vehicles?
Businesses should require proof of personal auto insurance, set minimum coverage requirements, check driving records, and consider adding hired and non-owned auto coverage to their insurance policy.
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