If you have access to a company car in your job, then it will be insured by your employer and you don’t need to worry about being covered in an accident. However, many companies expect employees to use their own cars when they’re conducting company business. In this situation, a number of questions arise regarding Pa. car insurance. When does the company’s policy cover you and when will you need to depend on your personal auto insurance policy?
Most large corporations have commercial policies that cover employees while they’re traveling. If you’re driving your own car on company business and you get into an accident, you may have to make a claim on your own policy. However, it’s also possible that your employer’s insurance carrier will cover the accident.
If your employer has you covered, make sure you understand how the process will work in the event of an accident. Find out who to call if there’s an accident, and carry that information with you while on company business.
The best way to avoid problems that can occur when using your vehicle for business errands is to make sure that your employer carries Employer Non-Owned Car Liability Coverage (ENOL) and Hired Auto Insurance. This is a type of commercial/business auto liability insurance. If you are driving your car for company business and cause an accident, this coverage will help pay for damage and injury to the other driver and vehicle.
Employer Non-owned Vehicle Coverage
Non-owned (that is, not owned by the business or the employer) auto liability coverage is usually included in commercial insurance packages or general liability insurance policies. It provides 3rd party liability (bodily injury and property damage) coverage for employees who are driving their personal cars on company business. A common mistake is in thinking that this policy would be the primary coverage should you have an accident while on company business. In fact, this coverage kicks in only after your own personal auto insurance is exhausted or your personal insurance company refuses to cover the claim.
As a rule, automobile coverage follows the automobile. This means that in the event of an accident, the primary coverage resides with the vehicle owner. Non-owned auto liability coverage is excess coverage, over and above your personal coverage. This also means that physical damage (comprehensive and collision) to the employee’s car is the sole responsibility of the vehicle owner. There is no means for a business to purchase physical damage coverage on a non-owned automobile.
Non-Owned Vehicle Liability Examples
To illustrate this coverage, consider the following scenarios:
Scenario 1: On the way to drop off company packages at the post office, a company employee runs a red light, hitting a second vehicle. The employee’s car is damaged. The accident causes damage to the second vehicle and the driver of the second automobile is injured.
- Coverage: The employee’s auto policy will cover the damage to his own vehicle. The employee’s auto policy will pay for the damage to the 2nd vehicle and for bodily injury of the driver of that vehicle up to the maximum of his liability limits. After the employee’s limits are exhausted, the company’s non-owned vehicle policy will kick in. The employer’s policy will pick up the excess expenses over and above the employee’s policy limits for damage to the second vehicle, and for bodily injury to the driver of that vehicle. No employer coverage is available for the excess damage to the employee’s own vehicle.
Scenario 2: When returning from a company-related errand, an employee hits a column in a parking garage at the business’s headquarters and damages his own vehicle.
- Coverage: The employee’s personal insurance policy pays 100% of the claim. The company’s non-owned vehicle policy will not take effect.
Scenario 3: You’re at a work site when you realize you’re running short on hex bolts. You send your employee, Joe, to the hardware store to pick up some extras to help get the job done. On his way to the store, Joe rear ends the car in front of him. The other car’s bumper is damaged, and the other driver has a sprained wrist. Since Joe was driving for work, Joe’s personal auto insurance can refuse to pay the bill. Fortunately, the company carries Non-Owned Auto insurance with a $300,000 combined single limit.
- Coverage: The Non-Owned Auto insurance would pay the following: $1,500 medical bill for the other driver’s wrist X-ray; $1,000 bill to replace the other car’s bumper. Since the total expenses are well below the $300,000 combined single limit, the expenses would be completely covered by the policy.
Hired Auto Insurance
Hired Auto Insurance provides liability protection when driving a vehicle that is not owned or registered to the business or employee, such as a rental car. If the vehicle is rented for less than 30 days, Hired Auto insurance will protect the rented vehicle.