If you provide company vehicles to your employees and these employees don’t have their own personal automobile insurance policy, a potential gap in coverage exists. To adequately cover commercial automobile liability, a drive other car endorsement is specifically intended to bridge this commercial auto liability insurance coverage gap, therefore keeping you safe.
Drive Other Car Coverage
Drive Other Car Coverage Basics:
So, what does Drive Other Car Coverage mean? If you have employees that you provide with company-owned vehicles, they often do not have an additional automobile and therefore do not carry a personal automobile policy.
If an employee doesn’t carry a personal policy and drives a vehicle borrowed from a party separate from the company, drive-other-car coverage affords them liability protection should an accident occur. As a result, you can lend out your car without the unwanted anxiety.
Your business automobile policy endorses your drive-other-car coverage. This provides coverage only for scheduled individuals.
How Does This Differ From Hired/Non-owned Coverage?
Some key differences between hired non-owned coverage and drive-other-car coverage:
- Hired Automobile coverage provides for vehicles that are leased, rented, hired or borrowed by the insured or its employees for business purposes.
- Hired non-owned coverage to employers when an employee uses their own personal vehicle for business purposes.
I have a commercial auto liability claim. Does that mean Coverage Applies to Me?
To show how drive-other-car coverage applies, consider the following situations:
- A salesperson rents a car for personal use on vacation and damages another vehicle. Is he or she covered?
- A business owner has all the vehicles titled in the company’s name. The owner’s family travels out of town on vacation and rents a car. They opt not to purchase coverage and an accident ensues. Is he or she covered?
- An executive borrows a friend’s minivan to move and is involved in an accident. Is he or she covered?
In all of these circumstances, the business automobile policy provides no coverage. This is because the accident did not involve the “covered auto,” or company-owned vehicle. A drive-other-car endorsement closes the exposure loop in these instances.
Minimize Your Commercial Auto Liability Exposure:
Consider these commercial auto insurance tips and tricks to help minimize your exposure:
- Require all of your employees who are either issued or that will drive company vehicles to have personal automobile policies. You do this by first inserting language into your company’s employee hand book.
- Notify Metropolitan Risk Advisory of any employees and family members that do not have personal automobile policies. We suggest you do an audit at least once a year and keep the results on file just in case. Make it a requirement that if an employee cancels their personal auto insurance coverage they must notify HR in writing. You can’t manage what you don’t know!
- Review the coverage provided on the endorsement so that you have a clear understanding of what is included as coverage differs greatly by insurance carrier. Coverage can include liability, medical payments, uninsured motorist and physical damage coverage. Review the endorsement to ensure that all employees and/or family members that do not have personal automobile policies are scheduled on the endorsement.
- Notify the carrier of any individuals not shown on the schedule that should be. Always do this in writing so you have written proof of the request. This means time and date stamped via email.
Especially relevant, continue planning properly as one of the trickier elements of insurance is commercial auto insurance coverage. A Risk Advisor who understands your business can help you understand drive-other-car coverage. This knowledge helps you and endorse your business automobile policy to reduce your exposure to loss.
Still have questions? Still want more information? Call us today at (914) 357-8444 to ensure that your automobile coverage adequately meets your needs. Or, you could also visit our website here. We are here to help!
