Employer’s non-ownership liability insurance protects a business when employees use their own vehicles for company business and the employer is sued for resulting auto liability. In plain language, the employer does not own the car, but it can still be held responsible if the employee was driving on company business when the accident happened.
Why the exposure exists
Businesses often assume personal auto insurance follows the employee and solves the whole problem. It does not. If the employee is acting within the scope of employment, the employer may still be named in the lawsuit.
This exposure commonly arises when employees use personal vehicles to:
- visit clients
- make bank deposits
- pick up supplies
- travel between job sites
Underwriting and claims issues
Insurers look closely at:
- how often employees use personal cars for business
- whether the company provides delivery or field-service operations
- whether hired and non-owned auto coverage is already part of the business auto program
Claims handlers then have to determine whether the accident arose out of company business and whether the employer’s non-ownership liability wording applies.
Practical example
An employee uses a personal car to deliver documents to a client and causes an accident on the way. The employee’s own auto policy may respond first for that driver, but the employer can still be sued. Employer’s non-ownership liability insurance is the coverage designed to protect the employer in that situation.