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Using a personal vehicle for work is common.

A business owner may use their own pickup to visit customers, carry tools or travel between job sites. An employee may use their personal car to attend a meeting, pick up supplies, visit a customer or make a delivery.

It can seem straightforward. The vehicle is insured, so everything should be covered.

But using a personally owned vehicle for business can create insurance considerations for both the person driving the vehicle and the business they are driving for.

For the employee or business owner, the first question is whether their Personal Auto Insurance properly reflects how the vehicle is being used.

For the business, there is another important question:

Could the company have liability if an employee causes an accident while using their own vehicle for work?

Employees need to understand their own insurance responsibilities. Business owners need to help set those expectations while also making sure the business is properly protected for its own potential liability.

Here is what every business owner should know when personal vehicles are being used for work.

Using a personal vehicle for work is different from simply driving to work

One of the first distinctions to understand is the difference between commuting and actually using a vehicle as part of the job.

An employee driving from home to their regular workplace and back again is different from spending the workday using their vehicle to:

• Visit customers or clients
• Travel between job sites
• Pick up supplies
• Make deliveries
• Carry tools or equipment
• Transport goods or materials
• Attend meetings at different locations
• Tow equipment or a work trailer
• Perform other business-related activities

The same distinction applies to you as the business owner.

If you personally own the pickup, car or SUV you use in the business, the way you use that vehicle matters.

The more a personally owned vehicle becomes part of the actual work being performed, the more important it is to make sure the insurer knows about that use.

What should a business owner do when employees use their personal vehicles for work?

If employees use their own vehicles for customer visits, meetings, deliveries, errands or other business activities, you should not simply assume the employee’s Personal Auto Insurance takes care of everything.

The employee is responsible for maintaining appropriate insurance on their own vehicle, but the business should help make sure employees understand that their insurer needs to know how the vehicle is being used.

Personal Auto policies can allow certain types of business use, but what is acceptable can depend on the insurer, the nature of the work and how frequently the vehicle is used for business.

If employees are expected to use personal vehicles for work, the business should consider having a clear process that includes:

• Identifying employees who use their personal vehicles for business
• Explaining that employees should disclose that business use to their own insurance broker or company
• Requiring employees to maintain a valid driver’s licence and appropriate Auto Insurance
• Requesting proof of insurance periodically, where appropriate
• Establishing minimum liability limits where appropriate
• Keeping records of employees who regularly drive for work
• Asking employees to advise the business of significant changes to their licence, driving record or insurance
• Reviewing these requirements periodically as part of the company’s driver or vehicle policy

The business owner does not need to decide whether an employee’s Personal Auto policy is adequate. That is a question for the employee’s insurer or broker.

Your role is to make sure employees understand that using a personal vehicle for work can affect their insurance and that the use should be properly disclosed.

There is also a second issue for the business itself.

Even when the employee owns and insures the vehicle, the company may still face liability if the employee causes an accident while driving on behalf of the business.

That is why you should also speak with your own commercial insurance broker about whether Non-Owned Automobile Liability coverage — which can help protect a business against certain liability arising from vehicles it does not own — should form part of your insurance program.

There are really two responsibilities:

1. The employee needs to make sure their vehicle is properly insured for its business use.
2. The business needs to make sure it is properly protected for the liability that can arise when employees drive on its behalf.

Does an employee need Commercial Auto Insurance?

Not necessarily.

Using a personal vehicle for some work-related activities does not automatically mean an employee needs Commercial Auto Insurance.

It depends on how the vehicle is being used.

An employee who occasionally drives to an off-site meeting may present a very different insurance situation from someone using their vehicle every day to make deliveries, haul equipment or transport customers.

The employee should explain the use to their own broker or insurer and let them determine whether their Personal Auto policy is appropriate or whether different coverage is required.

What if you use your own personal vehicle in the business?

Business owners face the same issue.

You may own your business but personally own the pickup, SUV or car you use every day.

Perhaps you use it to:

• Meet customers
• Visit job sites
• Carry tools
• Pick up supplies
• Haul materials
• Make deliveries
• Tow a business trailer

The fact that you personally own the vehicle does not automatically mean Personal Auto Insurance is the right solution.

Again, how the vehicle is being used matters.

If your vehicle plays a significant role in the day-to-day operation of the business, tell your broker exactly how it is being used.

Your Personal Auto policy may be appropriate with the correct business use disclosed, or Commercial Auto Insurance may be more appropriate depending on the circumstances.

Don’t assume that because you personally own the vehicle, its business use doesn’t affect the insurance you need.

What if the business owns the vehicle?

This situation is generally more straightforward.

If a car, pickup, van or truck is owned or registered by the business and used in its operations, Commercial Auto Insurance will generally be required.

That is true whether your business owns:

• One company car
• One work pickup
• Several service vans
• A delivery vehicle
• A larger fleet

Commercial Auto Insurance is not just for businesses with several vehicles.

One business-owned work vehicle can be enough to create a Commercial Auto insurance need.

What happens if an employee has an accident while driving their own car for work?

This is where the issue becomes particularly important for the business.

Imagine an employee uses their personal car to visit a customer.

While doing so, they cause a serious accident.

The employee owns and insures the vehicle, so their Personal Auto Insurance would normally be an important part of the claim.

But the employee was also acting on behalf of your business.

Depending on the circumstances, the company could potentially be named in a claim or lawsuit arising from the accident.

That means your business can have an automobile liability exposure even though it does not own the vehicle involved.

What is Non-Owned Automobile Liability Insurance?

Non-Owned Automobile Liability coverage is designed to help protect a business against certain liability arising from automobiles the business uses but does not own.

That can include situations where employees use their own vehicles on behalf of the company.

For example, an employee might use their personal car to:

• Visit a client
• Pick up business supplies
• Make a delivery
• Attend an off-site meeting
• Travel between company locations
• Perform an errand for the business

If that employee causes an accident while acting on behalf of the company, there may be potential liability for the business.

Non-Owned Automobile Liability coverage can help address that exposure.

And you do not necessarily need to own any company vehicles for this risk to exist.

A professional services company with no company-owned vehicles could still have automobile liability exposure if employees regularly use their own cars for work.

Does Non-Owned Automobile coverage insure the employee’s car?

No. This distinction is important.

Non-Owned Automobile Liability coverage is not a replacement for the employee’s own Auto Insurance.

The employee still needs appropriate insurance on their personally owned vehicle.

Think of it as two separate questions.

The employee needs to ask:

“Is my vehicle properly insured for the way I use it for work?”

The business owner needs to ask:

“Does my business have the right liability protection when employees use vehicles we don’t own on our behalf?”

Both need to be considered.

As an employer, you should not tell employees that your company insurance automatically takes care of their vehicle or their personal insurance responsibilities.

It may not.

How often — and how — employees drive matters

There is a big difference between an employee occasionally driving to an off-site meeting and someone using their personal vehicle every day to visit customers, make deliveries or travel between job sites.

The more frequently employees use their own vehicles for work — and the more the vehicle becomes part of actually performing the job — the more important it becomes to have a clear process around licences, insurance and driving standards.

Particular attention should be given when employees regularly use their own vehicles to:

• Make deliveries
• Transport passengers
• Carry merchandise, tools or equipment
• Haul materials
• Tow trailers
• Perform other regular commercial activities

If employee-owned vehicles are a regular part of how your business operates, discuss that use with your commercial insurance broker and make sure appropriate procedures and coverage are in place.

Your business may have more automobile exposure than you realize

When reviewing your Commercial Auto risk, don’t count only the vehicles owned by the business.

Look at all the vehicles being used on behalf of the company.

Consider:

• Vehicles owned by the business
• Vehicles you or other owners personally own but use for work
• Employee-owned vehicles used for company business
• How often those vehicles are used
• What employees are doing with them
• Whether they are making deliveries, carrying equipment or transporting customers
• Whether your business has appropriate Non-Owned Automobile Liability coverage

A company could own no vehicles at all and still have automobile liability exposure because employees regularly use their own vehicles on company business.

That is why it is important to look at the whole picture rather than simply count the vehicles listed on your Commercial Auto policy.

Three common situations — and what business owners should consider

Situation	What you should consider
The business owns the vehicle	Make sure it has appropriate Commercial Auto Insurance for the way it is used and the people who drive it.
You personally own the vehicle but use it in your business	Tell your broker exactly how it is being used and determine whether Personal Auto coverage remains appropriate or Commercial Auto Insurance is needed.
An employee uses their own vehicle for work	Make sure employees understand their responsibility to maintain appropriate insurance and disclose business use, while also reviewing the business’s own potential liability and Non-Owned Automobile coverage.

The key is recognizing that these are three different insurance situations and making sure each one is handled properly.

Most importantly, don’t assume that because your business doesn’t own a vehicle, your business has no exposure.

An accident involving an employee driving their own vehicle on company business can still become a business insurance issue.

Are personal vehicles used for work? Talk to Munn.

When personal vehicles and business use overlap, both the vehicle owner and the business need to understand their responsibilities.

Munn can help you look at the complete picture — company-owned vehicles, vehicles you personally own and use for business, and employee-owned vehicles being used on behalf of the company.

We can help you determine whether your current Commercial Auto program properly reflects how your business actually operates and whether additional protection, including Non-Owned Automobile Liability coverage, should be considered.

Let’s review how vehicles are being used in your business.

Visit www.munninsurance.com/business or call 1-855-726-8627 to speak with a Munn commercial insurance specialist.

Understand the exposure. Protect your employees. Protect your business.