Personal Automobiles Insurance helps your business with your vehicle in 2020. According to the U.S. Census Bureau, there are more than 240 million registered motor vehicles in the United States. Also, an estimated one-fourth that you use for business in some way. If your employees use personal vehicles for business use, you could be exposing your business to significant liability risk. Even if your employees have Personal Auto Policies (PAPs) for their personal vehicles. if a serious accident occurs during business use, your employees can sue your business to collect additional damages.
What is “Business Use”?
Activities that constitute general business use include visiting customers, picking up supplies, attending conferences, and commuting to and from work. For activities like this, the general business use of a personal vehicle is usually covered by a PAP. This is because a policy purchased for a specific vehicle has the primary insurance. In which covers damages before any other policy takes effect. An exception to general business use is livery or carrying goods or people for a fee. Livery includes the delivery of items such as food, flowers, or wholesale or retail items to customers, as well as chauffeur services. Livery does not consider carpooling or ridesharing and your PAP will cover it.
Employee PAP Coverage
For employees using their personal vehicles, the primary insurance on the vehicles will likely be their PAPs. You should know that it will cover your employees they use their vehicle for business operations. Encourage your employees to speak with their PAP carriers to be sure of their coverage. Also, to make it clear to the insurance agents what business activities the vehicles may be used for. Some PAPs appear to exclude coverage for business use, but they may include broad exceptions for a private passenger automobile. However, some policies may be stricter depending on the circumstances. Clarification may prevent complications if they file a claim.
Four Ways to Reduce Risk
Though employees’ use of personal automobiles may pose a risk to your business. There are steps you can take to help protect both your employees and your business from liability. Personal Automobiles Insurance can help you reduce risk to your business.
Review driving records and create an approved-driver list:
All employees that use a vehicle for business use should know to drive by a manager. This process should include reviewing motor vehicle records and PAP coverages regularly and maintaining records to help reduce risk exposure.
Establish standards for personal vehicles:
Even employees without any incidents on their motor vehicle records can be a risk to your business if they are driving personal vehicles that are not properly maintained. Establish company guidelines for maintaining personal vehicles. If you repay your employees for time spent driving or if they routinely use their personal vehicles for business, consider regularly collecting maintenance reports to gauge the reliability of personal vehicles.
Make the company policy clear:
After you create guidelines for the use of personal vehicles at your business, be sure to communicate them to your employees in a clear and timely manner. Although it is common to have policies against the use of intoxicating substances or mobile devices while driving, reminding employees of all of your company policies is an effective way to mitigate risk.
Establish rental vehicle policies:
The use of rental vehicles for business also presents exposure to risk. It may be beneficial to establish a relationship with a particular rental vehicle agency to determine which vehicles best suit the needs of your business and employees while traveling. You should also give your employees guidelines on which rental vehicle insurance coverages to accept during the rental process.
Obtaining Appropriate Personal Automobiles Insurance
You may need additional coverage if any potential risks from personal auto use threaten your business. A standard Business Auto Policy (BAP) will protect your business from any additional liability after an employee’s PAP has paid for damages related to personal auto use. Although employees who have personal vehicles should be required to have PAPs, obtaining liability insurance should be a priority to protect your business. In the event of a serious accident, your employees’ PAP coverage may not be adequate to pay for all the damages. Be sure to prepare a list of vehicles that may be used by employees and the type of business they may be used for, and contact NEWS Insurance Services in order to discuss your coverage options.