| Non-Owned Auto Insurance: |
Non-Owned auto liability insurance (that is, not owned by the insured the business or the
employer) is designed to protect a named insured entity for the risk of having employees drive their own
vehicles, or a client’s vehicle, on company business. Non-Owned Auto is provided usually with a Business
Package Insurance or endorsed into the General Liability Insurance.
A major misconception about Non-Owned Auto is that this coverage would be the primary coverage should
an employee have an accident while on business time (example: while a nurse is driving to a patient's
home, a care giver is driving a client to the doctor's, or a lab specimen employee is picking up or delivering
specimens), when in fact this coverage only kicks in when the employees primary coverage is exhausted.
Assuming an employee is driving his/her car while on business hours for the employer, which policy is
primary and which is excess?
The primary auto policy that resides with the owner, that is in place on the vehicle being driven is always the
first in line for liability, AND IS THE ONLY POLICY THAT WILL FIX THE EMPLOYEE’S CAR. Non-Owned Auto
Coverage is excess coverage over and above the car owner's personal coverage.
How does this work? Assuming an employee is driving for his/her company and hits another car, now the
other car is damaged and the driver of that car is seriously injured. The employee's auto policy will cover the
damage to his/her own vehicle. The employee's auto policy will pay for the damage to the 2nd vehicle and for
bodily injury of the driver of that vehicle up to the point of exhaustion of his/her liability limits, to extent allowed
by the law in the state. After the employee's limits are exhausted, the non-owned vehicle policy will pick up
the excess over and above the employee's policy limits for damage to the second vehicle and for bodily injury
to the driver of that vehicle. No coverage is available for the damage or excess damage to the employee s
own vehicle.
When ever an employer has their employees drive their own cars, the employer should make the
employees aware that they are incurring a personal risk when doing so that they are at risk of an unpaid
personal auto insurance claim (see note below). Also, to minimize the risk to the Employer, steps should
be taken to ensure that an employee who is asked or required to drive on business has a valid driver's
license, personal car insurance and a safe driving record.
The employer should require that each employee subject to driving their own car submit the following:
Note, all employees need to make sure that their private auto coverage will extend to incidental
transportation for use during business hours. It is recommended that each employee contact their
insurance company and inform them of their on-the-job driving. Some insurance companies will require a
business use rider, which will specifically endorse the policy for incidental business use of a personally
owned vehicle. The best time to notify an insurance company is prior to an accident, not when the vehicle is
involved in an accident, and the insurance adjuster is searching for any way not to pay the claim. (employers
should inform their employees of this and request a copy for proof).
employer) is designed to protect a named insured entity for the risk of having employees drive their own
vehicles, or a client’s vehicle, on company business. Non-Owned Auto is provided usually with a Business
Package Insurance or endorsed into the General Liability Insurance.
A major misconception about Non-Owned Auto is that this coverage would be the primary coverage should
an employee have an accident while on business time (example: while a nurse is driving to a patient's
home, a care giver is driving a client to the doctor's, or a lab specimen employee is picking up or delivering
specimens), when in fact this coverage only kicks in when the employees primary coverage is exhausted.
Assuming an employee is driving his/her car while on business hours for the employer, which policy is
primary and which is excess?
The primary auto policy that resides with the owner, that is in place on the vehicle being driven is always the
first in line for liability, AND IS THE ONLY POLICY THAT WILL FIX THE EMPLOYEE’S CAR. Non-Owned Auto
Coverage is excess coverage over and above the car owner's personal coverage.
How does this work? Assuming an employee is driving for his/her company and hits another car, now the
other car is damaged and the driver of that car is seriously injured. The employee's auto policy will cover the
damage to his/her own vehicle. The employee's auto policy will pay for the damage to the 2nd vehicle and for
bodily injury of the driver of that vehicle up to the point of exhaustion of his/her liability limits, to extent allowed
by the law in the state. After the employee's limits are exhausted, the non-owned vehicle policy will pick up
the excess over and above the employee's policy limits for damage to the second vehicle and for bodily injury
to the driver of that vehicle. No coverage is available for the damage or excess damage to the employee s
own vehicle.
When ever an employer has their employees drive their own cars, the employer should make the
employees aware that they are incurring a personal risk when doing so that they are at risk of an unpaid
personal auto insurance claim (see note below). Also, to minimize the risk to the Employer, steps should
be taken to ensure that an employee who is asked or required to drive on business has a valid driver's
license, personal car insurance and a safe driving record.
The employer should require that each employee subject to driving their own car submit the following:
- A copy of their valid driver's license
- A copy of their current personal auto policy showing that they have liability limits with a minimum of
$300,000. As a loss control it is recommended that the employer request the employees to get higher
limits that creates a higher barrier for the employer, thus giving greater protection to the employee.
- If required by the state, a copy of a valid state automobile registration and safety inspection.
- Always require and retain a copy of their Motor Vehicle Record dating back minimum 3 years to 5
years, and always request a new copy annually, (recommended every six months).
Note, all employees need to make sure that their private auto coverage will extend to incidental
transportation for use during business hours. It is recommended that each employee contact their
insurance company and inform them of their on-the-job driving. Some insurance companies will require a
business use rider, which will specifically endorse the policy for incidental business use of a personally
owned vehicle. The best time to notify an insurance company is prior to an accident, not when the vehicle is
involved in an accident, and the insurance adjuster is searching for any way not to pay the claim. (employers
should inform their employees of this and request a copy for proof).
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