Company Vehicles Personal Use- 3 Things You Should Know
Top 3 Questions About Business Auto Insurance Explained
Here are the 3 most frequent commercial auto questions I get asked by business owners and the corresponding answers:
1. Are my employees covered for a company vehicle they take home?
The employer is insured for any covered auto, but your employees are insured for only the vehicle the business owns, hires, or borrows and if used in the scope of the business operations. While the employer would be covered for the personal use of a company vehicle, the employee may not. If the employee has their own personal auto policy, it may cover the employee for his personal use of a company owned vehicle. The employee should confirm this with their personal auto insurance carrier.
The employer could extend personal auto coverage to an employee by either adding Drive Other Car Coverage (CA 99 10) or Individual Named Insured (CA 99 17) endorsements. If an employee is driving a company vehicle and allowed to take the vehicle home overnight, the employer should have a formal personal auto use policy and require the employee to provide proof of personal auto insurance coverage.
2. Can family members use the company car?
The employer is insured for any covered auto, but the employer’s spouse and children may not be covered for a company owned vehicle. If the employer has a personal auto policy, it may cover the spouse and children for the personal use of a company owned vehicle. The employer should confirm this with their personal auto insurance carrier. The employer can extend personal insurance coverage to their spouse, but not to their children, by adding the Drive Other Car Coverage (CA 99 10). To add the employer’s children, the employer would need to either modify the Drive Other Car Coverage (CA 99 10) to include children or add the Individual Named Insured (CA 99 17) endorsement. Most underwriters will be reluctant to add children to a commercial auto policy.
3. Can I add my personal car to my commercial auto policy?
The commercial auto policy provides coverage for the vehicles owned, hired or borrowed by the corporation, but not the scheduled vehicles personally owned by an individual. The intent is to exclude the personally owned vehicles that should be insured by a personal auto policy. If the personally owned vehicle is owned by the primary owner of the company, you may be able to add the owner as an additional named insured for auto coverage only. If the personally owned vehicle is owned by an employee, a formal lease agreement between the individual and corporation would need to be executed, and the Employees as Lessors (CA 99 47) endorsement must be added. Any vehicle scheduled on this endorsement would be considered a covered auto you own, and the employee would be considered an insured.
All three endorsements are underwritten with an additional premium charge. The employer should review these endorsements with their insurance broker to determine which is the best solution to cover their employees’ and/or family members’ personal auto exposures on their commercial auto policy.
Questions about insurance for company vehicles and their personal use? Talk to a member of the ‘A’ Team.
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