Many employers think nothing of allowing their employees to use personal vehicles for work-related purposes. However, employees who take trips to the bank, drop paperwork off at other offices, and/or travel between job sites can put a company at risk, and the consequences can be devastating.
"Everywhere employees drive is a non-owned auto exposure risk," said HUB Senior Transportation Risk Consultant Steve Bojan. "And a large loss that exceeds their personal insurance coverage has the potential to impact the employer's auto liability coverage."
Most organizations don't realize the exposure that exists if an accident occurs while a worker or contractor is on the road conducting business in their personal vehicle. A false sense of security could prevent some companies from implementing risk management practices that can greatly reduce the likelihood of a vehicle crash involving one of their employees.
Recognizing this risk is an essential first step, but learning how to mitigate it while obtaining the necessary insurance coverage will leave a company well prepared. The following five tactics can help protect your business and its employees:
1. Develop an Approved Driver List
An employee who will be on the road for any length of time should first be cleared to drive by a member of the company's management team who is responsible for safety. Businesses should have strict requirements in issuing these approvals, and should not allow employees with poor motor vehicle records and insufficient auto liability insurance to drive for business purposes. Reviewing your employees' driving records, requiring that they have auto insurance with appropriate policy limits, and ensuring that they meet age requirements to drive for work can help reduce your company's exposure.
2. Communicate Your Company Policy
Every business needs to have a workplace driving policy that is clearly communicated to employees who may be getting behind the wheel. While the law forbids workers from drinking and driving, there are other road risks to consider. Rules should be established regarding the usage of cell phones or other mobile devices while driving a car, limiting the number of passengers an employee can transport at one time, as well as prohibiting the use of motorcycles for company business.
3. Establish Vehicle Standards
Even if an employee has an outstanding safety record and passes a road test with flying colors, they can still be a danger on the road if they're driving an unsafe vehicle. Your company may want to establish criteria for private vehicles used in company business, such as age requirements and preventive maintenance schedules. If you compensate your employees for the use of their vehicles in the course of their work, a best practice would be to ask them to turn in maintenance reports at designated intervals to ensure that the vehicles are roadworthy and do not pose a hazard.
4. Obtain Appropriate Liability Insurance
Though a company should require its employees to carry their own auto insurance, it's still necessary to have a corporate policy that will protect your firm in case any incidents should occur. To determine what policy will best suit your needs, it's important to work closely with your HUB broker to determine appropriate policy limits. If you compensate your employees for driving their vehicles for work purposes, you should request a copy of their insurance certificate on an annual basis, and request that their auto policy not contain a business exclusion clause.
5. Review Rental Car Policies
If your employees are on the road for business trips, client meetings and industry conferences, they often use rental cars, which is another form of non-owned exposure. Companies may want to develop relationships with certain rental car agencies and predetermine what sort of vehicle a traveling employee should drive, and with what features it needs to be equipped. The company should instruct employees on what insurance coverage to accept as part of the rental agreement, as well as which coverage can be waived.
Employees who make trips to the post office or sales meetings in their personal vehicles aren't the only drivers who contribute to company exposure, according to Bojan. An increasingly mobile workforce is also contributing to the increased risk. "While some companies may think they're mitigating risk by having employees work from home, remote workers are still contributing to business exposure," he said. When people work from their residences, companies have even less control over important factors such as employee driving habits and vehicle maintenance, which play a key role in road safety.
"Exposure is growing, but more companies are beginning to identify this risk and put controls in place as a result of the increased vehicle claims they're seeing," said Bojan.
Your HUB broker can help you determine what policies would work best for your business to decrease the risks associated with employees using their personal vehicles while on the job.