Businesses often have their employees driving their personal vehicles for work. While this can make things convenient, there is a risk of financial liability for your company in the case of an accident. The fact that these vehicles are considered as non-owned autos for your company makes you responsible on an excess basis. Simply speaking, when an accident occurs, the employee’s insurance is primary and pays first. At the same time, the non-owned auto policy of the business is excess and pays second. So it makes sense to understand the concept of liability to know the implications of such mishaps. Also, you must have a strategy for dealing with them.
Use of personal vehicle for business
Unfortunately, business owners are not even aware of their non-owned auto exposure. When an employee operates a personal vehicle for a company’s business, it leads to non-owned auto exposure for the employer. Even though you don’t own the vehicle, the risk for non-owned auto liability still opens up. When it comes to the use of personal automobile for business, the following situations are to be considered:
- Driving for sales calls
- Running corporate errands
- Delivering something to another business’ place
- Picking up food for an office event
- Taking deposits to the bank
Salespeople are the most likely to open up non-owned auto exposure for your company because of the nature of their job. Similarly, people serving in financial and administrative roles are more likely to use their personal cars for business purposes.
Employer liability for accidents by employees
Generally, employers are liable for any accidents that employees get involved in while performing their work duties. These liabilities you may face could be of different types, based on the circumstances of the accident.
- Auto liability- If the accident happens with an employee’s vehicle on business duty, the company has to pay for any damages in excess of the personal auto policy limits of the employee.
- Workers’ compensation- The business will have to compensate the employee under workers’ compensation claim if the auto accident happens during the working hours.
- Negligent entrustment- In yet another situation, you can expect to be held liable for negligence in terms of hiring a person with a poor driving record and letting them drive around for business errands. The victim can have skilled and experienced car accident attorneys to represent their case and get massive compensation by proving your negligence. In fact, you may have to pay punitive damages for being grossly negligent about your employees.
Apart from having bad driving records, the driver may be indulging in distracted driving, texting, calling, eating or just not paying attention on the road. Even though the driver may be negligent, your business will have to bear the brunt of the accident. Considering the gravity of the situation, it becomes necessary to protect your business from such liabilities.
Protecting your company from accident liability
Since you will have to rely on employees and their personal vehicles for business errands at one time or the other, it is important to have a protective strategy in place. First things first, purchasing a non-owned auto insurance policy is the best move to cover your company in case of mishaps. At the same time, you need to have a proper program for people using their personal vehicles for business. Some aspects that you should implement in a non-owned auto program for the company are:
- Identify the people who drive (or could drive in the future) their personal vehicles for corporate tasks
- Mandate them to have a minimum value of personal insurance on their vehicles and obtain the proof of coverage annually
- Go through their Motor Vehicle Records annually to ensure that they are clean
- Establish guidelines for driver eligibility, stating the number and type of accidents or violations that disqualify them from driving eligibility
- Have a vehicle use program in place, along with a signed consent form outlining the practice for driving on company tasks
- Educate and train people on safe driving and make them aware of the perils of distracted driving
There’s a lot that businesses need to deal with today and legal hassles due to accidents caused by the employees is the last thing they would want to face. So you should surely go the extra mile to understand how business liability works in such mishaps and what steps can be implemented for adequate coverage. These measures can surely make your life easier and prevent problems for the company in the long run.
