When employees are entrusted with driving a company vehicle, they are victims of various risks. Unfortunately, many falsely assume that their personal auto insurance will provide adequate coverage in case of accidents or mishaps. Let’s dive into the potential risks faced by employees while driving company vehicles and shed light on how these risks are often not covered by personal auto policies. Understanding these risks is crucial for both employees and employers to ensure appropriate insurance coverage is in place.
Increased Liability
One of the primary risks employees face when driving a company vehicle is increased liability. When operating a vehicle for business purposes, employees are representing their employer. In the unfortunate event of an accident, any damages or injuries caused by the employee could result in significant liability claims against the company. Personal auto policies typically exclude coverage for accidents that occur during business-related activities, leaving employees and employers exposed to potential financial devastation.
Commercial Use Exclusions
Personal auto policies usually contain specific exclusions for vehicles used for commercial purposes. If an employee is driving a company vehicle and gets involved in an accident, their personal auto insurance is likely to deny coverage due to this exclusion. Some Insurance companies differentiate between personal and commercial use of vehicles, and using a company vehicle for work-related tasks falls under the latter category. Consequently, employees may find themselves personally liable for any damages, medical expenses, or legal costs incurred as a result of an accident.
Higher Policy Limits
Company vehicles are often required to have higher policy limits compared to personal vehicles due to the increased risks associated with business use. Personal auto policies typically have limits designed for individual drivers and private use. However, when operating a company vehicle, the potential for more substantial claims arises, necessitating higher coverage limits. Personal auto policies rarely offer the option to increase policy limits to meet the requirements of business use, leaving employees exposed to potential financial burdens in case of accidents or other incidents.
Lack of Coverage for Company Property
When driving a company vehicle, employees may transport valuable equipment, tools, or inventory necessary for their work. Personal auto policies usually do not provide coverage for such company property in the event of damage, theft, or loss. Therefore, if a company vehicle is broken into or stolen, the employee's personal policy is unlikely to provide reimbursement for the loss or damage, putting both the employee and the employer at risk of financial loss.
Employees who drive company vehicles should be aware of the potential risks they face and understand that their personal auto policies often fall short in providing adequate coverage. Employers must also take responsibility for ensuring proper insurance coverage is in place for their employees who drive company vehicles. Our professional staff here at Danskin would be more than happy to sit down with you and discuss business auto options for your business. If you’d like to learn more about business auto or just have some general questions about it, visit our website or give us a call at 732-449-3800.