Writing Small Business Risk: Driving Personal Car for Business Use

There are many situations in which an employee or owner would drive their personal car for business use, task or activity: travel between worksites, client visits, transportation of clients, travel home from work-related events and even quick stops to pick up food for a meeting. While it may seem innocent, it is important to consider the risks that are assumed in these everyday occurrences.  

Driving a personal car for business use in lieu of a company-owned vehicle may seem to minimize an employer’s liability, but companies can be held partially liable for damages in the event of an accident, and if an insurer discovers the individual was driving for business, it may take action against the employer for subrogation purposes.  

If the employee is making a work-related phone call or taking part in any business-related activity, the employer will be held accountable. When employees will be driving their own cars for work, there are several actions you can take as an employer to mitigate risk. 

Purchase Hired and Non-owned Coverage  

Any company that allows or requires employees to drive their personal car for business use should either purchase hired and non-owned coverage or add it to an existing automobile policy. Hired coverage is for situations in which cars are not owned by the company or the driver, and non-owned coverage protects the company against liability when vehicles that are owned by employees are used on behalf of the company.  

In the event of an accident, these policies supplement the driver’s personal auto policy, which is typically activated first. It’s important to note, for minimal yearly premiums, these policies generally protect the company only, not the car or the driver.  

Use a Company Policy to Reduce Risk 

According to estimates by the National Safety Council, over one million car crashes annually are attributable to cellphone use while driving. Since distracted driving accidents can have serious implications for companies, a company policy that emphasizes the importance of driving attentively and restricts the use of mobile phones is essential to preventing employee accidents in all vehicles, both personal and company-owned.  

In addition, the policy should clearly state when the use of a personal car for business use will be expected or allowed, and all employee job descriptions should specify when driving a personal vehicle will be a job function. As a condition to employment and thereafter at least on a yearly basis, those employees driving personal vehicles should be required to provide: 

  • Proof of a driver’s license 
  • Motor vehicle safety inspection certificates 
  • Copy of insurance certificates proving liability coverage at or above an established company limit including personal injury and medical limits 
  • Proof that the employee has declared the use of the auto for business to his or her insurer 
  • Exhaustive lists of all prescribed controlled medications  

Further, you should reserve the right to check motor vehicle records annually or more frequently.  

Enforce Your Personal Car for Business Use Policy 

After the driving policy has been instated, it should be actively communicated and enforced. Managers of employees utilizing personal vehicles should be directed to monitor the safety and maintenance of those vehicles. Employees found out of compliance with the company policy should be subject to reassignment or termination. It is every employer’s responsibility to ensure its employees’ safety on the job, and those that use personal vehicles on business are no exception.  

If you have employees who regularly or even occasionally drive their own personal car for business use we highly recommend adding non-owned and hired auto insurance to your coverage. Reach out to us today to review your existing policies to ensure you have sufficient coverage.  

Don’t wait – log on now to quote a non-owned and hired auto policy! 

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