Risk & Business Magazine General Insurance Services Spring 2020 | Page 28

PERSONAL AUTOMOBILES
BY: MATT WEBER,
BUSINESS RISK ADVISOR,
GENERAL INSURANCE SERVICES
PERSONAL AUTOMOBILES
FOR BUSINESS USE
A
ccording to the US Census
Bureau, there are more than
240 million registered motor
vehicles in the United States,
and an estimated one-fourth
of those are used for business in some way.
If you have employees who use personal
vehicles for business use, you could be
exposing your business to a significant
liability risk.
Even if your employees have Personal Auto
Policies (PAPs) for their personal vehicles,
in the event of a serious accident that
occurs during business use, your business
could be sued to collect additional
damages.
WHAT IS “BUSINESS USE”?
Activities that constitute general business
use include visiting customers, picking
up supplies, attending conferences,
and commuting to and from work. For
activities like this, the general business
use of a personal vehicle is usually
covered by a PAP. This is because a
policy purchased for a specific vehicle is
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considered the primary insurance, which
covers damages before any other policy
takes effect.
An exception to general business use is
livery, or carrying goods or people for a fee.
Livery includes the delivery of items such
as food, flowers, or wholesale or retail
items to customers, as well as chauffeur
services. Carpooling or ridesharing is not
considered livery and is covered under a
PAP.
Employees that work from home can still
pose a risk if they use personal vehicles for
business use. It may be more difficult to
ascertain the driving habits of employees
that work from home or the operational
status of their vehicles. Communicate
regularly with these employees
concerning your company’s policy for the
use of personal vehicles.
EMPLOYEE PAP COVERAGE
For employees using their personal
vehicles, the primary insurance on the
vehicles will likely be their PAPs. You
should know how your employees are
covered for the business use of their
vehicles. Encourage your employees to
speak with their PAP carriers to be sure of
their coverage and to make it clear to the
insurance agents what business activities
the vehicles may be used for.
Some PAPs appear to exclude coverage
for business use, but they may include
broad exceptions for a private passenger
automobile, or pickup trucks and
vans. However, some policies may be
stricter depending on the circumstances.
Clarification may prevent complications if
a claim must be filed.
FOUR WAYS TO REDUCE RISK
Though employees’ use of personal
automobiles may pose a risk to your
business, there are steps you can take to
help protect both your employees and your
business from liability.
Review driving records and create an
approved-driver list: All employees that
use a vehicle for business use should
be cleared to drive by a manager. This
process should include reviewing motor