If an accident occurs while an employee or volunteer is operating their personal vehicle for company business, your company could be held liable. Even when an employee is just running an errand, such as making a bank deposit, dropping off a proposal, or picking up a part, if an accident occurs your company could suffer as a result.
Although you cannot insure a non-owned vehicle, there are other steps you can take to protect your company before a loss occurs. If your employees or volunteers use personal vehicles for company business, even if just occasionally, the following guidelines can help reduce your risk:
- Determine a minimum level of Auto Liability insurance your employees and/or volunteers must carry. Also consider what documentation should be provided to your company to demonstrate that proper insurance coverage is in effect. For example, you might require that employees or volunteers submit a certificate of insurance each year that verifies coverage limits.
- Driving records should be checked prior to an employee’s hiring. Validate driving credentials and check for accidents and moving violations during the past five years. All recruiters, managers and human resource people should be aware of this policy.
- Avoid having youthful drivers, those with little driving experience, or drivers with more than one moving violation or accident use their vehicle for business-related purposes.
- Periodically check driving records for new offenses and moving violations. Introduce a procedure for how discovery of new offenses will be handled.
- Develop a written policy on business use of personal vehicles and communicate to all employees. Managers, human resource personnel and recruiters should share this information with any potential new hires.
- Be sure you remain in compliance with local, state and federal statutes while obtaining private information about your employees.
Insurance can play a role in helping to protect your business from this exposure. Non-Owned Auto Liability insurance may be obtained on a stand-alone basis or in conjunction with your General Liability coverage. Coverage for hired vehicles might also be available, if needed.
Insurance premiums for Non-Owned Automobile Liability depend on the frequency of personal vehicle use and how employees use their vehicles for your business. Premiums for this line of coverage are generally fairly reasonable.
Another way to reduce risk is to eliminate the exposure. If employees or volunteers are prohibited from using their personal vehicles for business-related purposes, it eliminates the possibility of an accident that will affect your company.
In the meantime, while you are mapping out your risk reduction strategy, maybe you should consider making that bank deposit yourself.