Many employers think nothing of letting their employees use personal vehicles for work-related purposes. However, employees who take trips to the bank, drop paperwork off at other offices, and travel between job sites can put a company at risk, and the consequences can sometimes be devastating.
"Everywhere employees drive is a non-owned auto exposure risk," said HUB senior transportation risk consultant Steve Bojan. "And a large loss that exceeds their personal insurance coverage has the potential to go back to the employer's auto liability coverage."
Most organizations don't realize the exposure that exists if an accident occurs while a worker or contractor is on the road in their personal vehicle while conducting business. This false sense of security could prevent some companies from implementing risk management practices that can greatly reduce the likelihood of a vehicle crash involving one of their employees.
Recognizing this risk is an essential first step, but learning how to mitigate it and taking the steps to obtain necessary coverage will help a company be better prepared. The following five tactics can help protect your company and your employees:
Develop an Approved Driver List
An employee who will be on the road for any length of time should first be cleared to drive by a member of the company's management team who is responsible for safety. Businesses should have strict requirements when it comes to these approvals and should not allow employees with poor motor vehicle records and insufficient auto liability insurance to drive for business purposes. By reviewing your employees' driving records, requiring that they have auto insurance with appropriate policy limits and ensuring that they meet age requirements to drive for work can help reduce your company's exposure.
Communicate your company vehicle policy
Every business needs to have a workplace driving policy that is clearly communicated to any employees who may be getting behind the wheel. While some employers may already have rules that forbid workers from drinking and driving, not all have considered other road risks. Your business should establish rules on cell phone or other mobile device use while driving a car, limit the number of passengers an employee can drive at one time as well as prohibiting the use of motorcycles for company business.
Establish vehicle standards
Even if an employee has an outstanding safety record and passes a road test with flying colors, they can still be a danger on the road if they're driving an unsafe vehicle. Your company may want to establish criteria for private vehicles used in company business, such as age requirements and preventive maintenance schedules. If you compensate your employees for the use of their vehicles in the course of their work, a best practice would be to ask them to turn in maintenance reports at designated intervals to ensure that the vehicles are roadworthy and do not pose a hazard.
Get appropriate liability insurance
Even though a company should require its employees to carry their own auto insurance, it's still necessary to have a company vehicle policy that will protect your firm in case any incidents should occur. To determine what policy will best suit your needs and company, it's important to work closely with your HUB broker to determine appropriate policy limits. If you compensate your employees for driving their vehicles for work, you should ask for a copy of their insurance certificate on an annual basis and request that their auto policy not have a business exclusion clause.
Review rental car policies
If your employees are on the road for business trips, client meetings and industry conferences, they often use rental cars, which is another form of non-owned exposure. Companies may want to develop relationships with certain rental car agencies and predetermine what sort of vehicle a traveling employee should drive and what features it needs to be equipped with. The company should instruct employees on what insurance coverage to accept as part of the rental agreement as well as which coverage can be waived.
Employees who make trips to the post office or sales meetings in their personal vehicles aren't the only drivers who contribute to company exposure, according to Bojan. Our increasingly mobile workforce is also contributing to the increased risk. "While some companies may think they're mitigating risk by having employees work from home, remote workers are still contributing to business exposure," he said. With workers conducting work from their residences, companies have even less control over important factors such as employee driving habits and vehicle maintenance that play a key role in road safety.
"Exposure is growing, but more companies are beginning to identify this risk and put controls in place as a result of the increased vehicle claims they're seeing at their own company or among their peers'," said Bojan.
Your HUB broker can help you determine what policies would work best for your business as you look to lessen the risks associated with employees using their personal vehicles while on the job.