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Joanna Johnson

Car Insurance Expert
Updated: 02/2022

Joanna is an expert on understanding how the different laws and regulations in the car insurance industry shape the way that policies work.

It’s difficult to run a business. There’s lots of things that you need to think about. There’s even more that you need to be aware of. All of that is on top of the need to conduct your core business operations.

Many company’s core business operations require employees to drive to different places. This might be something as simple as dropping off some items for a client or picking up supplies. However, it’s expensive to have a company car. Also, many companies don’t need to use a vehicle often enough to justify the costs of a company car.

That means employees frequently conduct company business in their personal vehicles. As a result, businesses need to understand what that means for the liabilities, and ultimately, their bottom line.

Car Insurance for Employees that Drive Their Own Cars

There are several benefits to employees using their own cars. First, you don’t need to purchase or maintain vehicles for your company. You also don’t need to worry about non-employees driving company cars when your employee takes the car home. Furthermore, the employee’s personal auto insurance provides the first layer of coverage for accidents and injuries.

Another benefit is accounting. Keeping track of an employee’s personal use versus business use of a vehicle is a nightmare. People don’t always check their odometers. Some employees also don’t accurately report their miles.

But there are some risks a business takes when employees use their personal car to do business. You can be liable for injuries and damages caused by an employee in the course of working. The employee’s personal auto liability coverage doesn’t include your risks. That means you could be facing huge damages, lawsuits, and other problems, all without insurance coverage.

You could bite the bullet and get company cars to do company work. But there is another option. You can also buy a business auto insurance policy. When you go to buy auto insurance you'll see this is a specialized insurance product for businesses. It protects them from any commercial liability exposure.

Reasons to Insure Employees Who Drive their Own Cars

There are several benefits to getting a business auto insurance policy, sometimes called a BAP. First, these policies are very flexible. You can check your current auto insurance policy to see what it covers. You need to see Symbol 1 or Symbol 9. Symbol 1 means that your policy covers any auto. Symbol 9 means that your policy covers non-owned cars only.

If you have BAP with symbol 1, then you’re good to go. However, Symbol 9 coverage only BAPs only cover liability. That means it doesn’t provide coverage for damage to your employee’s car.

Worker’s Comp vs BAP

Insurance coverage is complicated. All businesses have worker’s compensation insurance. This protects them from claims made by employees injured on the job. However, worker’s compensation insurance is tricky. There are situations where your worker’s compensation insurance won’t cover you.

Injuries from car accidents during business can be one of those situations. Some states allow employees to sue colleagues for specific work-related injuries. Worker’s compensation does cover some things. For example, if one employee hits another with a car in the course of business operations, then worker’s compensation applies.

But your BAP can fill this gap. You can get an “employees as insureds” endorsement. This protects your employees from liability. It does so by acting secondary to an employee’s personal liability protection. This resolves any potential inter-workplace legal battles. That keeps your business functioning smoothly and efficiently.

It’s important to note that adding employees as insureds doesn’t alter the coverage symbol. If you have Symbol 9 coverage only, then your BAP will still only cover liability. It doesn’t cover the damage to your employee’s car.

Reducing Your Risk for Employees that Drive Their Own Cars

There are a couple of ways you can reduce the risks from employees that drive their own cars. You can take these steps regardless of your business auto insurance policy status.

Car Insurance for Employees that Drive Their Own Cars

The first way to reduce your risk is to require employees who drive work to carry a certain amount of liability coverage. Most experts recommend at least $500,000 in coverage. This is important, as many people only carry the most basic liability protection required by the state. You can require employees to submit proof of this insurance as a condition of employment. You can also make it a continuing condition.

This option makes your employee’s insurance the first layer of coverage. You can also notify them that their policy will be the first layer of response to any work-related accident. This will help reduce your risk.

The next option is to check the motor vehicle records of anyone who might be in a position to drive as part of work. That includes sales staff as well as managers that might have to drive to meet clients, inspect sites, or any other reason.

This will tell you any traffic tickets the person’s received. It will also show any accidents they’ve been in. You should pay special attention to moving violations. People with multiple moving violations are more likely to become involved in accidents. It shows that they are habitually careless drivers. Moreover, they can cost more to insure.

If you follow these two steps, you can minimize the chance your employees will be in an accident. You also provide some protection for yourself from liability claims. As a result, you face less risk from employees using their own car for business purposes.

As you can see, there’s a lot to keep up with when you’re running a business. Every decision you make requires information about a wide range of things. Don’t let unexpected situations cause you to expose yourself to unnecessary risk. Think carefully about the best way to handle employees that drive for business purposes.

For some companies, getting company cars makes sense. But it’s not an option for every business. That’s why it’s vital to understand how your business auto insurance policy works. Make sure you know what’s covered, and what isn’t. That way you can make sure that you protect yourself from risk. In doing so, you take a great step toward maximizing your bottom line.


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