In many instances, employees use their own vehicles in their jobs or to perform tasks for their employer.  Some employees and employers incorrectly assume how insurance coverage will apply should an accident occur.

The common rule of thumb is that “insurance follows the vehicle,” meaning that the owner of the car will hold primary responsibility in an accident.  Thus the employee using their car on company time should expect their insurance to provide coverage first.  Should they not carry enough coverage or they happen to be without coverage, the business can only be protected if their policy has been endorsed with a coverage called “non-owned auto liability”.  This discussion is limited to the liability for damages to others as a result of an accident.  Damage to the vehicle itself – comprehensive or collision as it is commonly known – will not be provided by the business.  That is the sole responsibility of the employee or owner of the vehicle.

It is important that a business review its non-owned auto liability exposure.  Does it regularly have employees use their personal vehicles on company time?  What limits does the employee carry?  Has it been explained that damage to their vehicle and primary liability coverage is not covered by the business?  Does it have coverage for non-owned liability on its policy?

Even if the business does not own any vehicles, it may still purchase business auto liability coverage for use of hired, borrowed or rented and non-owned vehicles.