NON OWNED VEHICLE COVERAGE
Non-owned (that is, not owned by the insured the
business or the employer) auto liability coverage included in business
office packages or general liability insurance policies provides 3rd party liability
(bodily injury and property damage) coverage for employees driving their
personal cars on company business. Many NPCs have “non-owned vehicle”
coverage included in their general liability insurance package. A common
misperception is that this would be the primary coverage should an
employee have an accident while on NPC business (delivering lab
specimens or making a bank deposit). In fact, this coverage is invoked
only after the employee’s own personal auto insurance is exhausted.
As a rule, automobile coverage as a rule follows
the automobile. This means that primary coverage resides with the
vehicle owner. Non-owned auto liability coverage is excess coverage over
and above the car owner's personal coverage. This also means that
physical damage (comprehensive and collision) to the car is the sole
responsibility of the vehicle owner. There is no means for a business to
purchase physical damage coverage on a non-owned automobile.
Note 1: The coverage is available only
for employees; those who receive a W-2 from from the insured
organization.
Note
2: Due to recent court cases, NAVREF recommends that NPCs
should have a policy prohibiting use of cellular devices while driving.
Scenario 1: On the way to drop off lab specimens,
an NPC employee runs a red light, hitting a second vehicle. The
employee's car is damaged. The accident causes damage to the second
vehicle and the driver of the second automobile is injured.
Coverage: The employee's auto policy will cover
the damage to his own vehicle. The employee's auto policy will pay for
the damage to the 2nd vehicle and for bodily injury of the driver of
that vehicle up to the point of exhaustion of his liability limits, to
extent allowed by the law in the state. After the employee's limits are
exhausted, the NPC s non-owned vehicle policy will pick up the excess
over and above the employee's policy limits for damage to the second
vehicle and for bodily injury to the driver of that vehicle. No coverage
is available for the excess damage to the employee s own vehicle.
Scenario 2: An NPC employee hits a column in a
parking garage at the lab site and damages his own vehicle.
Coverage: The employee's insurance policy responds
100%. NPC policy will not respond.
NPC employees who drive their personal cars on NPC
business should be aware that they are incurring a personal risk when
doing so. Also, to minimize the risk to the NPC, steps should be taken
to ensure that an employee who is asked or required to drive on business
has a valid driver's license, personal car insurance and a safe driving
record.
NPCs may wish to
require each driver to submit:
1. A copy of their valid driver's license.
2. A copy of their current personal auto
policy showing that they have liability limits with a minimum of
$300,000.
3. A copy of a valid state automobile
registration and safety inspection (if required by the state).
4. A copy of their motor vehicle record
going back three to five years.
Although collecting the above items is not a
prerequisite for invoking non-owned vehicle coverage, the insurance
company may require an NPC to submit this information
in the event of a claim.
