MANY BUSINESS owners don’t think twice when asking a worker to run to the office supply store, to the bank or run another errand for the company while on the clock.
But as soon as that employee enters their personal vehicle on a trip for your business, you automatically become vicariously liable for their actions.
Think it’s not a big deal? There have been cases when employers have been found liable and ordered to pay up to $25 million for crashes involving employees using their cell phones while driving, according to the National Safety Council.
That means if your employee is in an accident and injures a third party, damages another car or injures themselves, your firm could be held liable.
For injuries to only your employee, your workers’ compensation insurance would handle the costs, but for injuries to others and third party property, you are ultimately liable since they were carrying out duties for your firm.
The employee’s auto insurance will be primary, but the problem arises when the coverage is insufficient. The employer can then be sued by the third party.
And once a third party knows there is an employer behind the person who hit them, that often encourages them to sue, seeking, even more, damages than they normally would.
With that in mind, you should do all you can to reduce your exposure by writing a policy for your driving employees (see box on right). Besides having a driving policy in place, you can also make sure to hire employees who are safe drivers by checking their driving records
during the hiring process.
Also, make sure that your management is on board with the policy. That means that managers should avoid texting or calling employees while they are driving on company duty. That would clash with your policy on barring cell-phone use while driving.
Finally, you should make sure that you have proper insurance in place in case calamity strikes. And unfortunately, some employees will inevitably be slack in following even the best laid out policies.
Commercial auto will cover all of your workers who drive company vehicles for collisions, but it won’t cover employees if they are driving their own vehicles while on the job. Such vehicles are considered non-owned autos because they are not owned by the named insured.
Employees are not insureds while driving non-owned autos,
even if they are using the vehicles for company business.
But if you do have workers who use their personal vehicles for
work, like sales reps, you can purchase an endorsement for your commercial auto policy: Entitled Employees as Insureds.
This endorsement covers workers who drive their personal vehicles on behalf of their employer. But it provides excess coverage only, meaning that the employee’s personal auto policy will apply first if the worker is sued after an accident
involving their personal auto. The endorsement would apply only if the employee’s personal policy limits are breached.