Many companies have been forced to shift their business model to include deliveries during the pandemic. This is understandable as business owners want to do what they can to survive and delivery services are enjoying unprecedented demand.
However, it is also very risky if owners and workers are relying on their own vehicles and personal insurance for business. Here’s why.
Proper Insurance Coverage
Just because you or your worker have auto insurance, it doesn’t mean that it will help you if you’re involved in an accident while using a personal vehicle for work. Most personal auto insurance policies specifically exclude coverage for work-related incidents.
As an example, your company has started to deliver due to a shutdown of your non-essential business. Your worker uses his own car to fulfill orders as the company vehicle can’t keep up.
While madly racing around town fulfilling orders, your employee has an accident. The driver and a passenger are injured. The injured parties decide to sue your worker and you, the business owner, as you are held responsible for their actions. The business owner’s policy excludes coverage as the vehicle is not business-owned.
Hired Auto & Non-Owned Auto Liability Coverage (HNO)
A business owner’s policy may also exclude coverage if you or your worker drives a vehicle for business that is not owned by the company.
Businesses should consider adding an endorsement to their commercial auto insurance policy for Hired Auto and Non-owned Auto Liability (HNO), too. It offers limited liability coverage specifically for scenarios where workers or owners use non-owned vehicles in their business.
Changing Regulatory Landscape
The pandemic has put all insurance policies under pressure due to the spike in delivery services. While some states have demanded insurers waive the business exclusion in a business owner’s policy, others such as Wisconsin are insisting on endorsements to personal auto policies.
So far, restaurant deliveries are the only scenarios considered, but there are sure to be more instances where exclusions and endorsements will come into play. Hired and non-owned auto liability coverages are a wise investment since liability claims can be very costly. An accident that leads to injuries can easily cost $100,000 or more.
Hired and non-owned auto liability coverages only kick in after the commercial auto insurance policy has been used up. As a result, this coverage is usually very affordable. It makes sense that any business owner allowing the use of personal vehicles should explore this simple solution. Laws are changing so quickly and no business wants to get caught up in a costly lawsuit without protection when it is easily avoidable. Contact us, today. We’ll make sure that you and your business have the right insurance coverages in place.