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 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.
With that in mind, you should do all you can to reduce your exposure by writing a policy for your driving employees. Some things you might want to consider in your policy include:
• A list of expectations you have of your driving workers.
• No talking on a cell phone or using any functions like apps and texting.
• Barring other activities while driving, like eating and drinking, in order to avoid other distractions.
• Training workers in the safe operations of vehicles.
• Making sure that any employees who drive for you are properly licensed.
• Requiring that they take breaks on longer trips.
• Requiring that their driving record be monitored periodically.
• Spelling out that they must buy personal auto insurance with certain minimum limits. The insurance policy should not include a business exclusion.
Beside 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 on 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.