Permitting an employee’s personal use of a company car may seem like a harmless job perk, but businesses should be aware that this comes with risks. It is essential to understand how insurance applies in these situations to avoid coverage gaps.
The experienced team at Bone, Robertson & McBride Inc. can assist you in ensuring you have the proper insurance policy in place. Contact us today for more information.
What Is Commercial Auto Insurance?
If your business decides to permit the use of company cars by employees, it is essential to review your commercial auto insurance policy. Commercial auto insurance generally provides coverage for vehicles owned by a business. Like a personal auto policy, it may provide coverage for liability, collision, comprehensive and/or uninsured/underinsured motorist.
Does Commercial Auto Insurance Cover Personal Use of a Business-Owned Vehicle?
If an employee uses a business-owned vehicle for personal use, commercial auto insurance coverage may vary. Policies typically contain provisions on who is “insured,” meaning the policy covers specific individuals. If you allow an employee to use a company vehicle for personal use, they fall into the “insured” category. However, if that employee then allows their relatives, friends or strangers to use the car, they may not be covered. We highly advise against the personal use of any Company Vehicle by an employee.
It may become even more complicated if specific uses are allowed while others are not. For instance, if the company car may be used to drive to and from work but not to run personal errands, the driver could face a gap in coverage. If the employee has a personal auto policy, they may be able to add an extended non-owned coverage endorsement. If they do not have a personal auto policy, they may need to buy a separate non-owner insurance policy.
Aside from the insurance implications of allowing employees’ personal use of company cars, there may be other risk management strategies to consider. For instance, you may wish to have a Company policy that states acceptable uses of company vehicles, mileage limitations, who is covered and what are considered safe driving habits. Companies need to outline how accidents are reported and if passengers are allowed.
Another element to consider is the amount of coverage you wish to secure. With the added exposures of personal use drivers, it may be advisable to increase your policy’s limits.
Contact Us Today
While it can be a nice benefit for employees, allowing personal use of company vehicles can present various risks. Your Bone, Robertson & McBride Insurance Broker can help you navigate these complexities and assist you in obtaining the necessary insurance coverage. Contact us today for more information, firstname.lastname@example.org or 800-510-1095.