Businesses have to use vehicles all the time. Some might offer deliveries as part of their services. Some might drive every day just to do their duties. Even as an insurance agent, you might get behind the wheel yourself to visit clients.
Anyone who uses a vehicle for business might need commercial auto insurance. Even those who drive their personal cars for business might need a policy. To offer this coverage, it's important to make sure your clients' commercial auto policies contain non-owned auto coverage.
Non-owned vehicle insurance is important to have if the insured business lets employees drive their own vehicles for work. This is especially important coverage for businesses with independent employees, such as real estate offices or home health providers. Talk to your commercial auto clients about adding it to their policy.
How Commercial Auto Insurance Works
When someone drives a car for business, they have just as many risks of accidents as anyone else. Accidents don't discriminate between personal and business drivers. And, if an accident occurs, the damage could be costly not only for the driver, but also for the business.
The bad thing is that private auto insurance policies, such the ones we have on our personal cars, won't cover vehicles used for business. When accidents involve business vehicles, the both the driver and the business might lose out, and those losses might be too great for the personal auto policy to handle. It's a commercial auto insurance policy, rather than a personal one, that will cover drivers operating commercially.
The thing is, personal auto policies won't even apply when someone drives their personal car while on business. That's why, when a business lets its employees use their own cars to do business, that business might need to insure them under their commercial auto policy. A non-owned vehicle endorsement on the policy might be the solution.
What Are Non-Owned Vehicle Endorsements?
Commercial auto insurance policies help businesses insure vehicles belonging to or used by the business. In some situations, the business itself might own the vehicles in question. In others, it might not. It's when the company doesn't own the vehicle that they might need to add a non-owned vehicle endorsement to the policy.
Suppose that an employee uses a business-branded and commercially-insured vehicle full-time. In this case, since the business owns the vehicle, the employee can drive it both for work and during their time off, and the commercial auto policy will cover it.
However, what if an employee drives their own car on business? For example, a realtor might use their own car to drive to show properties. This is their car, but it's the realty business that they represent. Should this employee lose control of the car and hit another vehicle, then the accident might be their fault. However, because they were driving on the business' watch, both parties might get sued by the other driver for the damage costs.
In this case, the business' commercial auto policy can help cover both the employee and the business, as long as it had a non-owned vehicle liability policy attached to it.
The employee's personal policy likely wasn't active because they were operating on business. Therefore, the non-owned vehicle coverage offered by the business can step in instead. Most policies contain at least liability coverage to pay for third-party losses up to the policy's limits. Therefore, it will pay for the other driver's property damage and bodily injuries, as well as defense costs.
Policies can usually apply to both part-time and full-time employees and their vehicles. It can even cover losses obtained if someone is driving a rented vehicle for business. However, the policy often won't cover physical damage to the employee's own vehicle. They therefore might need to refer back to their own car insurance policy.
Explain to your policy applicants the ins and out of how commercial auto policies apply to different employee drivers and their vehicles. If there is a chance that they could use a vehicle they don't own, then they might need a non-owned vehicle policy.
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