Why Your Business Needs Auto Insurance
To understand why automobile insurance is essential to your business, you need to understand what, exactly, auto insurance does. It is not designed to protect your car from damage in the event of an accident, but to protect you and your business from exposure to the exorbitant costs of lawsuits, car damage, personal employee injury, and more.
What Each Car Insurance Type Covers
Anyone who drives a car for personal use has had to purchase their own auto insurance policy. However, as a small business owner, it is important to be aware of how the personal cars of employees, company cars, or rental cars used on behalf of your business are covered. Whether your business has its own fleet of cars or your employees use their personal cars for work, your business may need a hired and non-owned auto insurance policy in place.
Make Sure You’re Covered
Should an accident occur, you’ll want to be sure that your business, employees, and community are also protected. In deciding between hired and non-owned auto insurance—or opting for both—we break down the benefits and coverage of each policy type and how they differ from personal coverage.
Hired Vs. Non-Owned Auto Insurance
How do non-owned automobile and hired automobile insurance policies differ? Hired vehicles are just that—automobiles like rental cars that your business hires, but does not own. If your employee gets into an accident while using that vehicle on a business trip, then the accident is covered by the hired auto insurance policy.
Non-owned vehicles are vehicles not owned by your business but used by employees while on the job. If your employee gets into an accident while driving his or her car as part of their work, then that accident would be covered by a non-owned auto insurance policy. Often, businesses use both non-owned vehicles and hired vehicles. This requires both policies to ensure that all vehicles and employees are protected against property damage and bodily injury respectively. This is true regardless of who owns the vehicle.
What is Specifically Excluded Coverage?
As straightforward as auto insurance coverage may seem, all auto insurance policies are not created equal. Say, for example, your employees’ personal cars are covered under their own auto insurance policy. Under some policies, your business may still be liable for damages to their cars while on the job. Many personal auto policies specifically exclude coverage for when an individual’s vehicle is being used for a commercial purpose. Don’t get caught with gaps in your coverage.
Do your employees use their personal vehicle for delivery, pickups, or business errands? If so, your business could be liable for any related damages or injuries. Even if the employee’s policy includes business use, the minimum limits on his or her policy may not be enough to cover the total cost of the accident. Your business would be responsible for damages above that policy’s limit.
If the vehicle hits another, you could be responsible for any repairs and medical bills. You could also be liable for accidental damages and passenger injuries. Costs like these can cripple any business. Therefore, it’s essential to secure auto insurance that covers every vehicle used by your business.
Where Auto Ends and General Liability Begins?
When it comes to hired and non-owned auto policies, purchasing auto insurance coverage may not be enough to protect you. Your employees may use their own vehicles in the course of their employment. If that’s the case, ensure that their personal auto policy includes at least $300,000 in coverage.
Additionally, hired and non-owned auto coverage can be included on a General Liability policy by endorsement, but this can decrease the amount of coverage available for standard General Liability claims. There are plenty of creative ways to customize your coverage and keep your costs down. If you’re curious to learn more, Bikelane can help. Our experts can create a customizable solution to manage this risk for your business.