Picture this. Larry has been a salesman with the firm for some time, and has been driving a company-owned car for most of his tenure there. It makes sense: Larry uses the car a great deal to travel on sales calls, and so it’s very efficient for him to simply use the same car for his own personal use. Larry is unmarried and has no driving age children. Therefore, no one else in the household drives.
Now, auto insurance is not a problem either. The company owns the car, so the company pays the insurance premiums. Larry is listed as an authorized driver on the company policy, and so is perfectly street legal.
But what happens if Larry winds up behind the wheel of another car? That’s what happened in this case: Larry got a call to fly to Chicago on a family emergency. He got to the airport and rented a car. Larry didn’t opt for additional insurance coverage from the rental car. He thought he was covered by the company.
Alas, Larry was distracted by the family emergency, and had an accident on the way home. He was at fault. No one was hurt, but he had caused a good deal of damage to a car in front of him.
The problem: When he called his company’s insurance company to file a claim, they told him he was on his own. The company policy only covered Larry in the company car, or a car the company rented. This last rental was Larry’s business, and not the company’s. Larry was on the hook, personally, for over seven thousand dollars in damage to the vehicle in front of him.
It could have been a lot worse.
The fix.
If you drive a company car, or if you manage a company that owns cars driven by your employees who retain them for their personal use, you can do something about this risk. Ask your agent about a specific type of coverage called other car coverage. There are a couple of different forms of coverage out there. But this endorsement extends insurance coverage to the employee even when driving a vehicle not rented or owned by the company. This coverage can extend to spouses, too – provided they share the same household.
Another approach is to add each similarly-situated employee to the company’s auto insurance policy as an individual named insured. This would also extend coverage to the employees of the firm so named without the need for them to acquire a personal auto policy (PAP) if they need to rent a vehicle for some reason.
If you have any questions about the proper way to protect yourself, call ACBI at 203-259-7580 or visit our website.
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