Business auto insurance can be confusing for the owner of a company, but you must have adequate coverage in place to protect your livelihood and your employees. The scope of your policy needs to be broad enough to mitigate potential complications from a shortage of protection.
Who qualifies as insured?
To understand why you need to add all drivers to your business auto policy, you must first understand who is considered an “insured” employee.
The Business Auto Coverage Form defines the persons or entities that qualify as insureds under commercial auto liability coverage under a paragraph entitled “Who Is An Insured?” The policy then separates the definitions of an insured into three groups:
You: You are an insured. “You” means the named insured, the person or company listed on the declarations.
Permissive Users (VARIES BY CARRIER): Anyone driving a covered auto you own, hire, or borrow with your permission. If you give someone permission to drive a vehicle you own, rent, or borrow, the driver is insured. Insurance companies often refer to drivers under this category as permissive users.
*Please note that several carriers include specific language within their policy to reduce or limit coverage for permissive users. You must READ and understand the stipulations of your insurance contract!
Omnibus Insureds: The Omnibus Clause is a provision in standard automobile liability policies that embraces “insured” certain persons within the definition without the necessity of naming them or designating them specifically.
The automobiles that are “covered” depend on the covered auto designation symbols that appear in the “declarations” section of your policy. For example, if symbol 2 (owned autos) appears next to liability coverage, you are covered for claims arising from the use of any car you own. Likewise, if the declarations page lists symbols 8 and 9 (hired and non-owned autos), you are covered for claims arising from any automobile you hire, as well as any car that you do not own.
Keep in mind that as the named insured, you are covered even if you are not driving the auto when the accident occurs. This coverage clause is crucial to know since employers are vicariously liable for negligent acts of their employees. Your insurance carrier should cover the claim if you get brought into a lawsuit resulting from an auto accident caused by a negligent employee.
Adding drivers to your policy
Listing all employees that may be driving allows the insurance carrier to assess the risk and underwrite as they see fit. Failing to add a driver could void coverage claim time. Underwriters like to know the driving history of those with access to the vehicles, which is one of the reasons it is imperative you let us know when you have additional drivers.
If you are running a business where driving is one of the responsibilities of your employees, such as a taxi driver or contractor, be sure to run a driving history on all new hires. Drivers with a checkered history will cause your rates to be higher, and you may want to consider employing someone with a better record.
However, we know that as a business owner, you get busy and may forget to add a driver. Not to worry – we can add broadening endorsements to your business auto policy to provide coverage.
Employees who drive their vehicles
If an employee who drives their car is doing so for the company, you should add the Non-Owned Auto Liability Endorsement. It provides coverage when employees drive their private vehicles for business purposes. See the following examples where your business could be liable if the employee causes an accident:
A salesperson on vacation makes a brief stop to visit a customer.
Your office manager stops by the office supply store when returning from lunch.
A supervisor stops by a client’s office to leave a product sample on the way home.
It is in a company’s best interest to purchase a business automobile policy even if employees use personal vehicles for business purposes. An employee may not have enough personal liability coverage to protect the business adequately in a severe accident.
Do you have more questions?
Suppose you’re looking for commercial auto insurance or have coverage already but aren’t sure it’s written correctly or comprehensive enough for your needs. In that case, we’ll give you our honest assessment to determine whether you are adequately covered. Complete the form below to connect with an associate to assist with your insurance and risk program. Thank you for visiting!
