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.
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.
Does your law firm have potential automobile loss exposures that you are not aware of? What about the potential loss from individual employees who operate their own personal vehicles for company business?
Many situations present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles.
Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
Do you occasionally send an employee to pick up a visiting client?
Have you sent employees to pick up lunch, drop off mail or pick up office supplies?
Have you ever rented a vehicle while on a business trip?
If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business.
Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable. Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if they use their own vehicle on the company business. However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage, you may be vulnerable to a potentially costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable due to an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.