Insuring Personal Autos on Business Auto Policies
My employee uses his personal vehicle on company business. Can I add his vehicle to my business auto policy?
This is a great question, and one that our customers ask frequently.
We realize there are a number of reasons why a business owner might want to insure an employee’s personal vehicle on the business auto policy. However, there are a number of good reasons why we recommend against doing this. Your business auto policy is just not designed to provide the protection needed by an individual and his or her family while using a personally-owned automobile. The business auto policy is designed to cover vehicles owned by the business or leased to the business by a commercial leasing company.
Our advice is the same whether the individual is a key employee, an executive officer or a partner of your company: Don’t insure an individual’s personally-owned automobile on the business policy. The arguments against insuring personal vehicles on the business auto policy are mostly technical in nature. Remember that an insurance policy is a legal contract containing precise wording designed for a specific purpose, and you hired us as your independent insurance agent to guide you in selecting an insurance policy that suits the needs of your business. Your attorney or accountant is not necessarily professional equipped to provide advice on your insurance policies.
Your business auto policy doesn’t cover the employee while driving his own vehicle. This is the biggest problem with insuring a personally-owned auto on the business policy. Your policy covers you if you are a sole proprietorship or your company if it is a partnership, corporation or other legal entity, and it covers employees while using vehicles owned by you or your company, but it doesn’t cover employees while using their personally-owned vehicles. This is true even if they are using their vehicles on company business, and even if you have executed a lease agreement with the employee for the use of their vehicle.
Your policy could be changed to add an employee as an “additional insured,” but such a modification still does not adequately address all of the individual’s coverage needs, especially when the employee or the employee’s family is using their own vehicle and for non-business activities.
Going beyond the coverage issues, is it really a good idea to subject your business insurance program to the potential exposure presented by the personal activities of employees and all their family members? The best solution is to keep employee-owned autos off your business auto policy. If you want to pay the insurance cost for an employee’s vehicle used in your business, this can be accomplished in other ways that don’t expose you and your employee to unintended consequences.
Swingle, Collins & Associates specializes in business auto insurance coverage The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for business auto insurance please contact your dedicated risk manager to discuss the benefits and services of commercial insurance coverage.
The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.