Do Employee-Owned Vehicles Need Liability Insurance?

As a business, protecting your assets should be a prime goal. What about your employee's assets? There's a fine line with using employee-owned vehicles for business purposes in terms of determining who is responsible for an accident or other claim. It's always best to be sure your employee is carrying the right type and amount of insurance to protect your business from any risks that can take place.

Does an Employee's Policy Protect Them?

If an employee is involved in an accident while operating the vehicle on company time, his or her auto insurance should provide financial protection and cover the incident. It is essential to read through the policy to ensure that is actually the case. Some policies may exclude business operation. Most policies do not include livery coverage, which is the business of carrying goods or people for a fee. This includes businesses that delivery packages, food or taxi services. If these are the types of businesses you own, you may need additional business-specific coverage on that vehicle.

If an accident occurs, the primary policy on the vehicle will likely cover the damage. In most cases, the personal auto insurance plan covers these losses because it is always the primary coverage. But is this enough protection for you?

Commercial Auto Insurance May Be Necessary

Keep in mind that as an employer, you are responsible for the negligence caused by your employee while he or she is working for you. This is where it can be risky not to carry your own commercial auto insurance, especially in the area of liability protection. If your employee infrequently uses his or her vehicle for business-related purposes, it may not be necessary to purchase a commercial auto insurance policy. However, in other cases, it can provide a level of protection that most businesses need.

Like all forms of business insurance, it is best to select a policy that meets your specific needs. That includes safeguarding your business' risks and liability matters. Commercial auto insurance may be necessary to do this. Avoid overlooking the importance of having a commercial auto insurance plan for your employee's vehicle. Talk with your insurer about how the vehicle is used and how often it is used in this manner to get a specialized layer of protection.