If employees use their vehicle for business, it may leave a huge coverage gap.
If an employee uses their own vehicle at work or runs an errand for their employer, the company could be held financially responsible in case of an accident. Usually a business auto policy only protects against loss involving company-owned vehicles and an employee’s personal auto policy excludes business use. This can present a coverage gap. Even if a business rarely uses non-owned autos, it only takes one serious accident to create a significant loss for the business
How Non-Owned Automobile Coverage eliminates coverage gap
If your company has a business auto policy, make sure it includes coverage for hired and non-owned automobiles. Non-owned autos are vehicles owned by others (such as an employee) that are used for business purposes for their employer.
If your business does not own any automobiles, it is possible to purchase coverage for only losses involving use of Hired and Non-owned vehicles. The ‘hired’ portion would cover your business for liability purposes when renting a vehicle for business use. The ‘non-owned’ portion would cover employees using their own auto in the business.
Make sure your limit for Hired and Non-owned coverage is enough to cover large court judgments. Non-owned coverage will protect both the business and the employee for liability, but this does not cover the damage to the employee’s auto.
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Excerpts from: Insurance Publishing Plus, Inc. 2014