Bridging the Gap: Company Car Coverage and Personal Use
Many employees drive company cars for
their work-related duties. But what if the company car were your only car? Even
as an employee of the company, it's likely you are not listed on the company’s business
auto policy.
So what happens when you borrow your
neighbor's car to run some errands on the weekend? This type of situation can
leave you with serious gaps in coverage. Under a business auto policy,
individuals using a borrowed auto for personal use are not
covered, even if the policy covers hired or borrowed autos. The individual must
be listed as an insured on the company’s business auto policy to have
coverage.
Eliminating these coverage gaps can be
complicated. While there's no simple solution, you do have a few
options.
First, check with your employer to ensure you
are allowed to use your company car for personal use. If you are not permitted
to use the vehicle for personal use, then you need to ensure that you have a
personal auto policy; and, obviously, don't use the company car for personal
use.
Even if your company gives you permission to
use your company car for personal use you probably won’t be covered for
vehicles that you borrow or lease. Here are two options for this type of situation:
- Purchase
a Named Non-Owner Auto Policy. These policies are for those who do not own
any automobiles but desire coverage for autos that they borrow or rent in
their name. Coverage may be limited and some coverage exclusions may
apply, so be sure to ask questions of your agent with regard to this
policy.
- Have
your company add you to its business auto policy with a Drive
Other Car endorsement. It adds the person(s) named in the endorsement and
their spouse while using a covered auto for personal use. Again, coverage
may be limited and exclusions may apply.
There are a few other options available
depending on your personal situation. Wherever possible your best bet is to
purchase a personal auto policy. It is difficult to match the insurance
coverages included in a personal auto policy when it comes to the situations
listed above. Another advantage of purchasing a personal auto policy is that in
recent times, the homeowner insurance market has seen a rapid rise in premiums.
Purchasing a personal auto policy can save you money on your homeowners
insurance as most companies provide multi-policy discounts.
Insurance coverage for you and your company
car can be complicated. The options I've noted here are just a few that
are available. Be sure to review your situation with us to be sure you are
protected.
The coverages described above are in the most
general terms and are subject to the actual policy conditions and exclusions.
For actual coverage wording, conditions, and exclusions, refer to the policy or
contact your independent agent.
Post authored by David Clay. Originally
published April 17, 2013. View original
post at: http://wp.me/p1Iv7E-LZ
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