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When An Employee Driving Their Own Vehicle Gets Complicated: Non-Owned Auto Liability

Posted by Jeffrey Forbes on Mar 5, 2020 5:08:24 PM

when an employee driving their own vehicle gets compliated non-owned auto liability artwork with person driving car

When is a company responsible for an employee’s use of their own car as part of their job?  The answer seems like it should be straightforward, but it can get complicated in the right circumstances. 

When An Employer Is Responsible Their Staff's Driving

Generally speaking, employers are vicariously liable for negligent acts committed by their employees in the course of their employment.   That means that if you send an employee out to pick up lunch for the office and they cause a car accident, your company could get sued.  The extent of the liability may vary according to circumstances, but getting sued is never a pleasant experience.

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When An Employee Drives Their Own Vehicle For Work

Normally, with auto policies, the owner of the vehicle’s policy is the primary insurance policy that will respond to a loss.  That means that the driver of the vehicle and the purpose behind the trip are secondary considerations as far as liability is concerned – for the most part.  There are a number of circumstances, however, where a company might get brought into a claim or lawsuit when an employee s driving a personal car on company business and that’s where non-owned auto liability insurance comes in. 

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What is Non-Owned Auto Liability?

Non-owned automobile liability insurance for your company is included in most commercial auto policies.  It’s primary purpose is to act as an excess policy.  It provides additional coverage in circumstances where the vehicle owner’s policy may not meet the limits of an accident, leaving plaintiffs to search for deeper pockets.  To this end, the coverage also provides defense costs to help cover the costs of litigation. 

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How Your Business Is Protected

There are circumstances, though, where the non-owned auto coverage has to act as primary insurance.  If the vehicle owner’s insurance policy denies coverage due to the nature of the trip being undertaken when the accident occurred, a non-owned policy will step in and act as primary coverage to protect the interests of the business.  This may happen when an employee is using their own vehicle to make deliveries for your company.  Delivery driving is normally excluded from personal auto policies.

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Knowledge Is Power

Still, to protect against unnecessary loss history and increased premiums, companies should do their best to aggressively tackle any issues they have with non-owned autos.  This means ensuring that the company should verify that any employees driving as part of their employment should have relatively clean driving records.  It also means ensuring those employees have personal auto insurance to cover any accidents, and ideally with sufficient limits to protect both the employee and your business.  It is important to note that non-owned auto liability will only protect your business; it will not cover your employee directly.

 

Topics: For Your Business, Risks For Businesses, Laws for Employers