What is Non-Owned Auto Coverage?

 

Non-owned auto coverage provides liability protection for your business when accidents occur involving vehicles not owned by your business but used for business purposes. This primarily applies to employees using their personal vehicles for work-related tasks.

• Business Liability: It protects your business from liability claims (bodily injury and property damage) that arise when an employee's personal vehicle is involved in an accident while on company business.

• Secondary Coverage: It typically acts as secondary coverage, meaning the employee's personal auto policy would pay first. If their policy limits are exhausted or if your business is held directly liable, non-owned auto coverage would then respond.

Think of it as a safety net for indirect risks; non-owned auto coverage safeguards your business from the potential liabilities that come with employees using their own cars for work.

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Why Is It Important?

 

• Avoids Gaps: Without this coverage, your business could be responsible for significant financial damages and legal costs if an employee's personal auto insurance isn't sufficient or if your business is named in a lawsuit.

• Protects Your Assets: It helps prevent a catastrophic financial hit to your business in the event of a severe accident involving an employee's personal vehicle used for work.

• Common Scenario: Many businesses have employees who occasionally run errands, make client visits, or travel between work sites in their personal cars, making this coverage a practical necessity.

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Additional Points to Consider:

 

• Definition of "Business Use": Understand what constitutes "business use" for your policy. This can vary and might exclude regular commuting but include specific work-related tasks.

• Employee Disclosure: Encourage employees to inform their personal auto insurers that they use their vehicles for some business purposes, as this can affect their personal coverage.

• Employee Driving Records: While non-owned auto coverage doesn't cover the employee's vehicle directly, maintaining good records of employee driving history can be beneficial for overall risk management.

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By adding non-owned auto coverage, you're extending crucial liability protection to situations where your business's operations extend beyond your owned vehicles, providing vital peace of mind.