Often employees are furnished automobiles by their employer. Under the Business Auto Policy, the employee is covered only when using the vehicle within the scope of the employer’s permission. If this permission extends to personal use of the vehicle (such as a family vacation) the employee is only covered in that vehicle and not in any vehicle not owned, borrowed, or rented. Further, the employee must share the limits of the policy with the insured. Often permission of the employee to use the car for pleasure does not extend to members of the employee’s family.For example, suppose an employee has permission to use a company vehicle for personal use. The employee takes his family on vacation in the employer’s car. He is covered, subject to sharing limits with the employer, while on vacation. Suppose also that he decides to rent a four wheel drive vehicle to explore some scenery difficult to access with the company car. There is no coverage for the rented vehicle under the employer’s policy. Four ways to solve this problem are listed below. Aswith other insurance decisions, insureds should consult with a recognized insurance professional for their particular situation.
Endorse the Personal Automobile Policy
The personal automobile policy normally excludes any vehicle furnished for the insured’s regular use. The key term here is “regular use.” A temporary loaner while a car is being repaired, borrowing of a neighbor’s car to run an errand, and renting a car on vacation are not furnished for regular use. Vehicles furnished by employers are often for regular use. The extended non-ownership endorsement can be added to the personal auto policy to cover such vehicles.
Named Non-Owner Coverage
If the employee does not own another vehicle and, therefore, has no personal automobile insurance, he or she may buy a Named Non-Owner policy. This covers the insured and listed family members for operation of a non-owned vehicle.
Individual Named Insured Endorsement to the Business Auto Policy
Commonly used by sole proprietors, this endorsement covers the individual named insured and family members for both owned and non-owned vehicles.
Drive Other Car Coverage
This endorsement is also added to the business auto policy and includes listed individuals and their spouses as insureds for non-owned vehicles. This endorsement is more likely to be used when the company vehicle is furnished to an employee by a corporation. (See Business Auto Policy).