Here's a common question we get; “I am supplied a car by my employer and am permitted to use it for both work and pleasure. My employer told me that I need to get my own insurance to cover me when I use the car off duty. How can I do that under my personal auto policy?”
The answer: The Personal Auto Policy has an exclusion that states that there is no coverage for the use on a vehicle furnished or available for your regular use. Thus, when driving the employer-owned company vehicle there is no coverage under his personal auto policy. This would be the same if the spouse or another family member used the company vehicle. This is a little known gap in all personal auto coverage, but a very common situation.
Normally, the policy written in the name of the business would protect the employee, but in this case the employer told the employee he was not protected off duty. This being the case this person has a huge gap in coverage.
The answer is to add an endorsement to the personal auto policy referred to as the Extended Non-Owned Coverage for Named Individuals to the personal auto policy. Each person in the family should be named in the endorsement if there is any chance they would drive the company vehicle.
This endorsement will fix the gap in coverage when an employee is furnished an auto for this regular use (or even has one available for his regular use out of a pool of vehicles). But note this is only for Liability coverage and there is not going to be any physical damage coverage for the vehicle.
If the company won’t add the extended non owned endorsement (or a similar one) to the personal auto policy or can't add it, the next option would be to buy a Named Non Owned policy to fill the gap in coverage. In effect, this accomplishes the same thing as the Extended Non Owned Coverage for a Named Individual but may be more expensive.
There are other examples when you would want to add the Extended Non Owned Coverage for a Named Individual. For example your neighbor might have an extra vehicle that they allow you to use whenever you need it, or a student in college who has the use of a room mate’s vehicle.
Here is another scenario: You don’t own a vehicle and don’t have a personal auto policy, but you do have a company vehicle to use. You then borrow someone’s auto and have an accident. There is no coverage under your company car policy. Here are the two solutions to fix that gap in coverage. #1 have the company amend their commercial auto policy to add the Drive Other Car Coverage endorsement or buy a Named Non Owner policy for yourself.
There are some other reasons that someone who has a company vehicle would want to add the Extended Non Owner Coverage for a Named Individual onto their auto policy even when the business auto policy extends protection to the employee, and that is that the limit of liability must be shared with the named insured (the employer). Or, the employee may not feel comfortable with the liability limit on the business auto policy, or may not have faith that the company will keep the coverage in force or keep the liability coverage at the same level. Many times the employee who has this company vehicle isn’t in any type of a position where they would even know if the company policy would cover them.
Another sound reason for any employee who drives a company owned pickup, van or larger truck on the job to have Extended Non Owned protection is that fellow-employee suits are becoming more common. This is, an increasing number of courts are allowing one employee to sue another (at fault) employee for injuries sustained in the course of employment. The employee’s personal auto policy excludes business use of a truck and the employer’s policy excludes bodily injury to a fellow employee. Thus, the employee is left without protection under either policy. The simplest way of coverage for this exposure is endorsing the employee’s policy with extended non owned coverage.
These are all great reasons why having the advice of a good, professional independent insurance agent can be invaluable!
