Doug Imholte
VP, Business Insurance Producer
Non-owned auto liability coverage can be an important consideration for franchise businesses. Even if your franchise doesn’t have any vehicles titled in its name, this coverage may help protect your business when employees use their personal vehicles for company business.
This matters especially if an employee has an accident while driving for work and injures someone else. In that case, both the business and the individual could face financial exposure.
Examples of employees driving their own car for business purposes include:
- Driving to the post office, bank, or another business errand
- Traveling to and from a company meeting
- Driving a client to or from an appointment
- Making a delivery to a customer
- Driving to another franchise location
The employee’s personal auto liability coverage would typically respond first, subject to the policy’s terms and limits. If those limits are not enough, your business could still be involved in a claim. Non-owned auto coverage may help protect your business in this situation. The same may also apply to you as the owner if you use a personally titled vehicle for business purposes and are involved in an accident.
If a claim arises, attorneys may look closely at how the vehicle was being used and whether the business had appropriate controls in place.
Risk management best practices
When employees use their personal vehicles for company business, consider these risk management steps:
Insurance coverage
Require employees who use personal vehicles for company business to maintain at least the minimum auto liability insurance required in your state, or higher limits if recommended by your insurance advisor. Ask employees to provide an annual certificate of insurance showing the policy period and liability limits, and keep a copy on file.
Set driver eligibility standards
Establish guidelines for acceptable motor vehicle records (MVRs) before employees drive on company business. Review MVRs at least annually for employees who may use personal vehicles for work. If an employee has an unacceptable driving record, allowing that person to drive for business could increase the risk of a negligent entrustment claim.
For more information about non-owned auto liability coverage for your franchise business, or to discuss your insurance program, please contact your Marsh McLennan Agency Franchise client specialist.
