The question came up again this month on whose policy responds when an employee is involved in an accident while on the job. Having a clear understanding of an insurance policy mechanics before an accident will avoid some headaches!
A personal auto policy that insures the employee’s car will be the only source of coverage for that vehicle. The employee’s auto insurance would also be the primary source of coverage for the employee if property damage and/or bodily injury are caused to other third parties involved in the accident. A standard personal auto policy will only exclude coverage for business use if the vehicle is being used as a delivery service to transport people or property for a fee. The definition of an “insured” on a personal auto policy includes any organization (employer) should there be legal responsibility.
Should the employer be legally responsible due to the potential of vicarious liability, the business auto policy would provide coverage to the employer/business in excess of any coverage provided by the employee’s personal auto policy as long as “Non-Owned Auto” coverage is endorsed on the policy.
An employee injured while driving on company business would be covered under the company’s worker’s compensation policy. The workers compensation policy would provide coverage for the medical bills and 66 2/3% of the employees lost wages.
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