While the distinction between a company car and a personal car may often seem blurred—particularly when an employee takes the company vehicle home on a daily basis—there are important considerations to ensure adequate insurance coverage in the event of an accident. A company car may be a standard sedan or a pickup truck, work truck, van or any other vehicle owned by the employer but driven on a regular basis by employees. It may be a vehicle that is routinely in possession of one employee, or simply one of many vehicles in a company motor pool that are driven by any number of employees.
The Company Responsibility
Every business should purchase commercial or business auto insurance to fully cover company-owned vehicles driven by employees for business purposes during working hours. The business is responsible for purchasing commercial auto insurance coverage for all vehicles that have the company name on the title. If a business owner has an employees who occasionally utilizes personal vehicles for company purposes and the company has no commercial auto insurance, the business owner should at minimum secure “hired/non-owned” auto insurance as part of a general business liability policy.
The bad news, for business owners at least, is that commercial auto insurance is often far more expensive than personal auto insurance. The higher cost is justified by insurers due to the fact that, once the vehicle is commercially insured, any employee of the company is permitted to drive the vehicle (assuming they have company permission) and is covered. Due to the higher number of potential drivers and the greater risk diversity, insurers charge more for commercial coverage. On the other hand, the good news is that commercial auto insurance typically offers more coverage than personal policies.
Personal Use Of Company Cars
Suppose you drive a company car for business purposes and take it home or have regular access to it. Are you covered if you have an accident while driving the company car on a non-company errand? Be aware that many commercial auto insurance policies specifically exclude coverage for an accident that occurs if the vehicle was being driven for non-business purposes. In such cases, even if you have permission from your employer to use the vehicle for personal purposes, the commercial insurer may refuse to cover damages or injuries that occur in the event of an accident.
Private Coverage For Company Accidents
A careful reading of your private auto insurance policy on your personal vehicle will likely reveal the fact that coverage does not extend to “other vehicles regularly furnished for your use such as business vehicles.” Many drivers are unaware of this crucial gap in private insurance coverage and wrongly assume that their personal policy will cover accidents that occur in a company-owned vehicle. To ensure full coverage in either scenario, that gap can be filled by purchasing Extended Non-Owned Coverage for specific named individuals who may drive a company car on non-company purposes. This additional coverage, added to your personal auto insurance policy, will protect you from liability if you have an accident in the company car. Many Extended Non-Owned Coverage policies automatically cover the policyholder and spouse. However, to extend coverage to other family members, any person in your household who might at any time have occasion to drive the company-owned car should be also listed as a named driver.