Bridge Your Auto Policy Gap with Drive Other Car Coverage

Wednesday June 11, 2014

JoWood600px“This information is important to know if you drive a company car, or provide a company car to your employees. There can be gaps in coverage, it is best to be aware before a loss!” Jo Wood | jwood@peabodyinc.com Do you provide company vehicles to your employees? If so, do these employees have their own personal automobile policy? If not, a potential gap in coverage may exist. To adequately cover your risk, a drive-other-car endorsement is specifically intended to bridge this gap. Drive-Other-Car Coverage Basics If you have employees that are furnished a company-owned vehicle, often they do not have an additional automobile and therefore do not carry a personal automobile policy.  If the employee doesn’t carry a personal policy and drives a vehicle borrowed from another party – other than the company-issued vehicle – drive-other-car coverage affords them protection should an accident occur. Drive-other-car coverage is endorsed onto your business automobile policy and provides coverage only for scheduled individuals. How does this differ from hired/non-owned coverage?
  • Hired automobile coverage is provided for vehicles that are leased, rented, hired or borrowed by the insured or its employees for business purposes.
  • Non-owned coverage is afforded to employers when an employee uses their own personal vehicle for business purposes.
Are you covered? To show how drive-other-car coverage applies, consider the following situations:
  • A salesperson rents a car for personal use on vacation and damages another vehicle.  Is he/she covered?
  • A business owner has all the vehicles titled in the company’s name. The owner’s family travels out of town on vacation and rents a car, opts not to purchase coverage, and is involved in an accident.  Is he/she covered?
  • An executive borrows a friend's minivan to move and is involved in an accident. Is he/she covered?
  • In all of these circumstances, the business automobile policy provides no coverage since the "covered auto," or company-owned vehicle, was not involved in the accident. A drive-other-car endorsement closes the exposure loop in these instances.
What steps should I take to minimize exposure? 
  • Require all of your employees who are either issued or that will drive company vehicles to have personal automobile policies.
  • Notify us of any employees and/or family members that do not have personal automobile policies.
  • Review the coverage provided on the endorsement so that you have a clear understanding of what is included. Coverage can include liability, medical payments, uninsured motorist and physical damage coverage. Review the endorsement to ensure that all employees and/or family members that do not have personal automobile policies are scheduled on the endorsement.
  • Notify us of any individuals not shown on the schedule.
Proper Planning Is No Accident An agent who understands ’s business can help you understand drive-other-car coverage and endorse your business automobile policy to your individual needs. Call us today at 248-634-7731 to ensure that your automobile coverage adequately meets your needs