The pressure of owning your own business is enough to keep you up all night determining ways to keep you and your employees safeguarded. For many small businesses today, the office is in reality wherever work takes you. This in turn often requires travel by car.
Whether you or your employees drive your own vehicles, you have company cars, or you utilize rental cars, recognizing the type of commercial auto insurance you need to protect your business can be complex. In addition to personal vehicle and rental car insurance, there are two other types of automobile insurance you should understand; hired auto and non-owned auto coverages. These coverages can be added to support your general liability insurance policy.
HIRED AUTO INSURANCE COVERAGE
If an employer, or one of the employees has an accident in a rental car, three different insurance policies can potentially come into play.
First, the driver’s own auto liability coverage will still apply, just as if they were driving their own car. However, some comprehensive and most limited personal auto insurance policies don’t include hired car coverage. In the event there’s an accident, the employee is personally liable for injuries or property damage to other parties. Second, there is the rental car agency’s physical damage and liability coverage offered at the time of rental. And third, there’s hired automobile coverage which is an additional coverage that either supplements or replaces a car rental agency’s liability coverage. This essentially protects your company in the event of a lawsuit resulting from an accident.
While hired auto insurance only covers liability to your company and not necessarily physical damage, you need to ensure the driver has hired car physical damage coverage as part of their own policy. If not, you will need to purchase the rental agency’s physical damage coverage whenever you or an employee rents a car.
NON-OWNED AUTO INSURANCE COVERAGE
If your business typically requires you or your employees to drive personal vehicles, you’ll want to understand non-owned auto coverage. This type of insurance protects your company against lawsuits that may occur in the unfortunate event your employees are involved in an auto accident while driving a personal vehicle on company business. What non-owned auto coverage does is protect your business if the other party involved in the accident decides to sue your company. Similar to hired auto coverage, the driver’s personal liability insurance still applies if the driver is sued. Moreover, the driver’s personal auto insurance should cover physical damage resulting from an accident.
DO I REALLY NEED LIABILITY COVERAGE?
Some clients may require your business to carry auto liability coverage to protect themselves against any liability resulting from an auto accident caused by one of your employees. Hired auto insurance coverage and non-owned auto insurance coverage may be a smart investment even if your client doesn’t require it. You might wonder what the cost is of protecting your business against potentially high claims as well as facing risks that your company might be sued. Investing in these liability coverages, usually less than $150 per year, is not only low but may actually help you sleep better at night.