Automobiles - Understanding Non-Owned and Hired Liability Coverage
By Dan Tharp
Regardless of whether you operate self-serve, exterior-only, or full-service car washes, you may have potential automobile loss exposures that you are not aware of — even if there are no vehicles titled to the business. You’ve taken all of the necessary steps to ensure that your building and equipment are properly covered in the event of an accident. But what about the potential loss that arises from individual employees who operate their own personal vehicles for company business?
There are many situations that present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles. • Do managers or administrative employees use their own vehicles to go to the post office or bank on your company’s behalf? • Have you ever sent an employee to pick up a fellow employee or drop them off after work? • Have you sent an employee to pick up lunch, drop off mail, or pick up supplies? • Have you ever rented a vehicle while on a business trip or attending a car wash show? • Do you provide a car allowance for business use of a manager’s personal vehicle?
If an employee has an accident under any of these circumstances, your business can be held accountable and sued for damages. If you do not have any vehicles titled to the car wash, you most likely do not have a commercial auto policy. And if you do have a commercial auto policy it most likely will only cover employees while they operate company-owned vehicles to perform company business.
Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable. Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using their own vehicle on company business. However, there is a good chance that damages could exceed your employee’s policy limit and the excess would then be passed on to your car wash. Without non-owned and hired automobile liability coverage you may be vulnerable to a potentially costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can also be added to your general liability policy if you do not have a business automobile policy. It protects your car wash if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
Since these scenarios, even if not everyday occurrences, could certainly present some very costly exposures to your operations — and the cost to transfer the risk to your insurance provider is very inexpensive — talk to your agent today. Ask if your policy currently includes coverage for non-owned and hired automobile liability. If not, request a quote and protect yourself today.
Dan Tharp is vice president of sales of Joplin, MO-based The Insurancenter. He can be reached at: DTharp@theinsurancenter.com.