MANY COMPANIES rely on employees to use their own vehicles for work and others have traveling employees who rent vehicles when on the road.
In either case, if your company doesn’t carry non-owned auto insurance, you may be dangerously exposed to liability in the event of an accident. Without it, one accident could cost your business hundreds of thousands or more in legal and medical expenses.
The role of personal auto insurance
When an employee is in an accident while using their own car for work, their personal auto insurance will generally respond first. However, many policies have exclusions or limits for business use, especially if that use is frequent.
Even when coverage isn’t excluded, personal liability limits may not fully cover serious accident damage. Many people carry only the state-required minimums, which are often too low to cover expensive claims, especially those involving injuries or litigation.
In those cases, injured parties may look to the employer for compensation. Non-owned auto insurance then serves as excess liability coverage, protecting the business once the employee’s personal coverage is exhausted.
Firms that need coverage
- Those with employees who drive their personal vehicles to meet clients or pick up supplies.
- Those that require staff to rent cars while traveling on business.
- Those that use delivery drivers who drive their own vehicles.
- Those that employ part-time or temporary staff who use their own vehicles for work.
What is non-owned auto insurance?
Non-owned auto insurance provides liability coverage for businesses when employees drive their own vehicles or rental cars for work. It does not cover physical damage to the vehicle itself — that falls under the driver’s personal or rental coverage — but it does cover third-party bodily injury and property damage from accidents for which your business may be liable.
What it covers
Non-owned auto policies will typically cover (up to policy limits):
- Legal costs, including attorneys fees, court costs, settlements and judgments.
- Medical costs for third parties.
- The cost of repairs or replacement when property is damaged.
- Liability coverage when employees use rental cars for work.
This coverage is typically added as an endorsement to a commercial auto or general liability policy
The takeaway
If your business allows or expects employees to drive their own vehicles or rental cars for work-related tasks, you need non-owned auto insurance.
Relying solely on personal auto policies is risky and can leave your company vulnerable to major financial loss. A relatively small investment in coverage can offer vital protection if the unexpected happens.