These days, it seems that many organizations are relying more and more on employees and volunteers to personally carry out business-related activities of the organization. This may include using their own personal vehicles for any number of business-related purposes, such as traveling to off-site meetings, picking up office supplies, attending organization-mandated development classes, or conducting home visits to clients. Whatever the purpose, using personal vehicles on behalf of an organization may create unusual (and more difficult to manage) exposures for the organization.
While using insured-owned vehicles is almost always preferred, it is understandable that at times and under certain circumstances using employees’ or volunteers’ personal vehicles to conduct your organization’s business-related activities may be necessary. Nevertheless, before permitting such use, your organization should be careful. As such, consider the following suggestions to help guide your organization in developing a policy with respect to the use of personal vehicles for business-related activities:
- Define when it is acceptable to use employees’ or volunteers’ personal vehicles to carry out the business- related activities of your organization. For example, when it comes to transporting an organization’s clients, insured-owned vehicles should almost always be utilized, as employees’ or volunteers’ autos are often not subject to the same level of control (for example, regular maintenance, routine safety inspections, accident and emergency kits on board, seating fitted for special needs transport, etc.).
- Develop a procedure to verify that employees and volunteers who are using their personal vehicles on behalf of your organization are appropriately licensed, their vehicles are in good condition, their driving history is understood, (and is acceptable), and they’re adequately insured. For example, consider requiring at least annual proof of personal automobile insurance for any employee or volunteer who may drive a personal vehicle on behalf of your organization, and make sure the specific personal auto liability limits of insurance for all employee and volunteer drivers are at least $100,000/person and $300,000/accident (or $300,000 combined single limit) for bodily injury.
- Review and examine your organization’s auto liability policy closely with your insurance advisors and consultants to determine what types of auto liability losses are (or are not) covered and where coverage gaps might lie. Address those issues and concerns throughout the policy period, particularly if you have new employees or volunteers throughout the policy period who may be using their personal vehicles from time-to-time for business-related activities.
- Notify employees and volunteers who drive personal vehicles for your organization’s business purposes that their personal auto insurance will typically be primary in the event of an accident. This is another reason for utilizing insured owned vehicles whenever possible, as employees and volunteers often do not understand this exposure.
- Provide safety resources (for example, driver and vehicle orientation, transportation policy review, defensive driver training, etc.) to all individuals who drive on behalf of the organization’s business, whether it’s their own personal vehicle or an insured-owned vehicle.
This Really Happened…
A four vehicle chain reaction accident occurred where an employee of the insured was driving his personal vehicle while in the course and scope of his work as a donation supervisor. The employee’s vehicle was slowing down in heavy traffic and was rear ended by another vehicle. There were two other vehicles involved which appear to have been in front of the employee’s vehicle and into which the employee’s vehicle was pushed.
Fortunately this policy included our Auto Broadening Endorsement. This endorsement provides liability coverage for the named insured and the employee while an employee is using a:
Covered “auto” the named insured doesn’t own, hire or borrow while performing duties related to the conduct of the insured’s business.
However, the Other Insurance section of the policy it provides:
For any covered “auto” the named insured doesn’t own, the insurance provided by our policy is excess over any other collectible insurance.
We confirmed the existence of personal auto coverage for the insured employee and assisted in getting the claim processed by that carrier. This resulted in no exposure to the insured.
Remember to make sure the usage of personal vehicles does not disrupt your organization and its operations. Manage these risks accordingly.Suggestions and comments contained herein are provided for purposes of general education only. Suggestions and comments are not intended for the purpose of providing you with legal advice or legal counsel, and are not intended to assure compliance with or complete analysis of any law, rule or regulation. In addition, suggestions and comments should not be interpreted to imply or infer that all exposures, hazards or loss potentials on any subject or issue were identified or considered. No warranty, or guaranty of accuracy, fitness or suitability, express or implied, is granted with respect to any of the information contained herein.