Non-owned auto liability ranks among the top risks for many nonprofit organizations, yet it’s one of the most neglected and underestimated exposures.
Most nonprofits rely on volunteer and staff drivers to fulfill their programming needs, whether it’s transporting seniors to doctors’ appointments or driving to the bank to deposit donations.
So what happens if the driver gets into an accident?
The first line of defense is the driver’s personal insurance, which will insure against individual liability for bodily injury or property damage to the other party.
But not all drivers’ personal insurance is sufficient, and in the event of a serious claim that outstrips the individual’s insurance ability to pay, victims or their lawyers may try to hold the organization accountable for the actions of its employees or volunteers.
Four steps to reduce non-owned auto liability
A multi-pronged approach can be the optimal means to reduce organizational risk involving vehicles. Here are four steps in such an approach:
1. Establish a non-owned auto use agreement between employees, volunteers and the nonprofit. This covenant should clarify that the individual is directly responsible for liability arising from operation of his or her vehicle. It should also set the following expectations:
- Proof of minimum acceptable insurance limits and notification to the organization of material changes
- Current state vehicle inspection and confirmation that ancillary equipment, such as trailers, are designated or rated for road use
- Vehicle in safe operating condition when used for organizational business
- An acceptable personal motor vehicle record (MVR)
- No “business use” exclusion in personal auto insurance policy
2. Develop and enforce an organizational vehicle use policy. Such a policy should set your rules of the road including:
- Authorized vehicle use
- Ramifications of distracted driving
- Driver selection criteria, including a point system for moving violations
- Vehicle rental requirements, if applicable
- Post-accident investigation guidelines
3. Add employees and volunteers as insureds on the organization’s non-owned auto liability insurance policy. A simple endorsement can extend the organization’s liability protection to individual drivers, excess of their own valid and collectible personal insurance, minimizing the risk of inadequate insurance and interparty conflicts. The rider is often available at nominal cost, but ask a broker to advise the need for the rider and formally request one.
4. Umbrella/Excess liability Insurance. Any accident involving multiple vehicles, occupants, or serious injuries is likely to quickly exceed insurance limits. A catastrophe policy augments primary auto insurance, increasing the total amount of protection for any one occurrence or series of accidents.
These safeguards will reduce vehicular risk, conserve your organization’s resources for mission, and help to protect a hard-earned reputation.
Contact your HUB Nonprofit expert for more information on securing a non-owned auto liability policy that’s right for your organization.