Exclusively from Foa & Son
We look at a lot of commercial insurance programs and often find ones that do not include a business auto policy. The normal explanation is that “the business owns no autos”. The business may not have owned autos, but there is almost always some exposure to auto related claims from non-owned or hired autos. Since the standard general liability policy includes an absolute exclusion for any auto related claims, the absence of an auto policy creates a potential gap in coverage.
In today’s litigious society, accident claimants will often seek recovery from as many sources as can be found. It’s not difficult to imagine scenarios wherein any company with employees (and possibly not even operating from a physical location) can still be sued based on non-owned auto liability in the aftermath of a motor vehicle accident.
The classic example is an employee using their personal vehicle for a work errand who is involved in an at fault accident. At the accident site, the employee mentions, “I was just on an errand for XYZ Company”; sure enough, XYZ Company ends up being named in the ensuing lawsuit. This is particularly likely if the employee doesn’t have sufficient liability limits on his personal auto policy, which is quite often the case.
Hired auto exposures arise differently, but again, it’s not difficult to anticipate situations where an employee or officer of a company may need to travel and rent an auto, and if it’s in the course of business, assume it’s covered by the company’s insurance. Hired auto physical damage exposure occurs here as well, but again, without specific coverage in place prior to an accident, a company may be looking at an uninsured claim.
Whether or not a business owns any autos almost every commercial entity has some potential liability exposures from hired and non-owned autos, and frequently for hired car physical damage as well.
It’s an easy fix. Some insurance companies will add an endorsement to their general liability policy covering non-owned and hired cars; in other cases a separate auto policy must be purchased. Either way, such protection can be added for minimal additional cost (think hundreds, not thousands in most cases) and fill an important gap in coverage.