Employee-owned Auto Coverage

Employee driving a vehicle.

Employee-owned Auto Coverage

Why do I need auto coverage if my law firm doesn’t own any vehicles? We get asked this question frequently, so I want to clarify some confusion surrounding this coverage.

There are scenarios where a law firm must have auto coverage to properly cover a claim even if they don’t own any autos.  For example,  if you send an employee on an errand in their own vehicle and the employee is involved in an accident where they are at fault, your firm can be named in the lawsuit because it was a company-related errand or she was sent on. 

How do you protect yourself in this type of scenario?   Hired and non-owned auto coverage is specifically designed to protect you and your company from situations like the one mentioned above.  This coverage protects you from bodily injury and property damage arising from using a vehicle that is owned by an individual other than the firm but is used on the firm’s behalf. 

For law firms, this coverage can actually be added to your general liability policy for little or no additional cost, even when selecting limits as high as $1,000,000.  

  Coverage Tips:

  • This coverage is supplemental coverage meaning your employee’s insurance policy will pay first; if your employee’s limits are exhausted from a claim or you do not have insurance, the non-owned and hired auto coverage will pay.  Tip: Verify all employees carry insurance on their vehicles with minimum limits of $100,000 per occurrence.
  • Coverage for “hired” vehicles will provide liability coverage for rental vehicles you may use for company business.   Be aware that it will only replace the liability portion, not the physical damage coverage.  Therefore, it is still important to purchase the rental agency’s physical damage coverage, or you can actually purchase the coverage through your current insurance company. 
  • Check MVRs (Motor Vehicle Records) for all employees.   By verifying the driving records of all of your employees will help protect you from potential claims.  You will know which drivers to avoid sending on company-related errands because of the potential risk they pose. 
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