As a contractor who owns commercial vehicles, do you really know what your employees are doing on the road? To properly protect your business, you need to understand the intricacies of liability insurance. It contains both non-owned and rental vehicle coverage.
Do you know how many companies have employees who use their cars to go "on commission" on behalf of the company (non-owner) or who rent a car for business purposes (rental car)? You might say that almost every company is in this situation at one time or another. It's true that most drivers won't get into an accident while on the road. But if that were the case, are you sure your company is covered for liability if the driver was on the road for work?
Is the Company Responsible?
If an accident occurs and your company is held legally responsible, non-owned and leased vehicle coverage applies. The employee's personal auto insurance serves as primary coverage and extends to the company if the car is used in the course of employment. But what happens if the vehicle is not insured for business use and the employee does not meet the terms of the coverage? It is possible that the damage exceeds the limit on the employee's policy. In both of these situations, the liability could well be transferred to the company.
Conversely, what if your employee uses a "commercial vehicle" for personal use? He or she is on a business trip and decides to take a few extra days to visit his or her aunt Monique who lives nearby. Or, he or she is attending a conference and takes advantage of a free evening to visit the city. These situations would not fall under the definition of business continuity events and the non-owned and hired vehicle coverages would not apply in the event of an accident.
What is Covered by the Vehicle's Commercial Insurance
Here are the top 3 "non-owned and leased vehicle" coverages. First, non-owned automobile liability coverage is primarily designed to protect businesses. In order to ensure that it serves its purpose, it is important to consider a few basic points when purchasing this type of insurance.
- Under "non-owned" auto insurance, the additional insured clause does not allow a manager, employee, etc. to rent a vehicle in their name.
- Under the "Non-Owners" Auto Policy, the Additional Insured clause does not allow for occasional personal use.
- Under the definition of "rental vehicles", the clause must be in the name of the company and does not allow for occasional personal use.
It is therefore essential, on the one hand, to choose the right protections and, on the other hand, to inform your employees to make them aware of the risks and consequences.
When in doubt, Lussier is in the best position to guide you on the right path!