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TIS Insurance Services

Do I have an automobile liability exposure if my company does not own any vehicles?

Jared Smith, Broker  |  TIS Insurance Services, Inc.

Emphatically, the answer is yes! It is certainly common for tech, allied healthcare, and social service organizations to have employees routinely drive their personal autos for company business, and this exposure is usually much higher than anyone realizes. I know of organizations that have 100s of vehicles on the road every day supporting their client base with very little oversight, and each of these vehicles is a catastrophic claim waiting to happen. Every organization is responsible for the actions of their employees while driving on behalf of the company, and if that employee is involved in an at-fault accident, then you can bet your bottom dollar that the organization will be sued.

Many organizations assume that they are protected either by their commercial general liability policy or with the employee’s personal auto insurance, however that is often not the case. It is true that Hired and Non-owned Auto Liability can be added to a commercial general liability policy, however it is often left off the policy to save a couple hundred dollars. Likewise, it is also true that employees have their own insurance that acts as the first layer of defense, but what are their limits? Most states have minimum limits that are absurdly low, and how do you know if the insurance is even in effect or will pay out if the personal vehicle is being used for business purposes? Either way both of these are reactive positions.

The key to proactively protecting your organization from catastrophic automobile liability claims is to institute a Drivers Safety/Fleet Safety policy. Also, to conduct periodic drivers safety training classes in order to reduce the likelihood that a catastrophic accident will occur and to make sure you are doing your best to protect your clients and the public.

The following are five keys to a quality Drivers Safety Program:

1) The Policy needs to be simple to understand; it needs to be read and signed off on by every employee; it needs to be enforced.

2) The policy must address what is an acceptable driver motor vehicle record (MVR), and, at a minimum, MVRs should be checked annually by the organization.

3) The policy must address minimum standards for personal autos used on company business, especially when transporting clients. We recommend that the organization have a “manager’s checklist” to inspect each personal auto used for company business on a quarterly or semi-annual basis. We understand that you are not mechanics, and the point of the checklist is to make sure that the vehicle is in safe operating condition (the headlights work, the break lights work, the blinkers work, the windshield wipers work, the horn works, tires have proper tread depth, there is proof of insurance in the vehicle, etc.). Essentially, the basics to make sure that you are reasonably protecting your clients and the public.

4) A vehicle maintenance plan for owned vehicles.

5) Instructions for the authorized and proper use of the vehicle (seat belts, cell phones, speeding, etc.) Don’t be overwhelmed by the creation of a good and effective Drivers Safety Policy. Your insurance agent should be able to both help you craft a drivers safety policy to meet your organization’s specific needs and provide you drivers training courses. If not, I would be happy to help!

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