Many companies understand that there are risks associated with managing a fleet of vehicles for company use. What may not be taken into account is liability for accidents that occur in vehicles that are hired or personal vehicles that the company doesn’t own. It would be wise to address any hired non-owned auto exposures and look at how you can protect your company from these risks.
You can be at risk if any of your employees use their personal vehicles to run errands for the company, salespeople use their own vehicles for company business, or if any employees are reimbursed when they drive their vehicles to attend business meetings, visit customers, or pick up supplies or parts. Your company has a hired non-owned auto exposure anytime someone uses their personal vehicle on behalf of the company.
An accident could result in major costs to your company
If an employee causes an accident in his or her own vehicle, the liability insurance policy on the vehicle is the first line for liability coverage. After the limits of liability on the employees personal automobile are exhausted, the injured party may look to the company to pay additional damages. There are, however, steps that can be taken to protect the company from non-owned automobile exposures.
Require that employees use company vehicles and don’t allow them to drive their own vehicles for company business. If personal vehicles must be used, allow only designated employees to conduct business with personal vehicles. Review all employees Motor Vehicle Record (MVR) before they start driving and again each year and make sure that they provide proof of insurance.
For employees who regularly drive for company business, require that the company be named as an additional insured on their personal auto policy. Regularly inspect their vehicle to assure it is properly maintained and safe to operate. Investigate all accidents that occur and establish safety rules for drivers of non-owned vehicles. Finally, keep written records of everything being done to control the hired non-owned auto exposures.
To further protect your company don’t allow anyone to drive for the company if they have received a class A violation within the past 5 years, have three or more type B violations in the past three years, two or more at-fault accidents in the past three years, or two B violations or one at-fault accident in the past three years. Their MVR should be reviewed at least once every six months.