Many employees drive company cars for their work-related duties. But what if the company car were your only car? Even as an employee of the company, it’s likely you are not listed on the company’s business auto policy.
So what happens when you borrow your neighbor’s car to run some errands on the weekend? This type of situation can leave you with serious gaps in coverage. Under a business auto policy, individuals using a borrowed auto for personal use are not covered, even if the policy covers hired or borrowed autos. The individual must be listed as an insured on the company’s business auto policy to have coverage.
Eliminating these coverage gaps can be complicated. While there’s no simple solution, you do have a few options.
First, check with your employer to ensure you are allowed to use your company car for personal use. If you are not permitted to use the vehicle for personal use, then you need to ensure that you have a personal auto policy; and, obviously, don’t use the company car for personal use.
Even if your company gives you permission to use your company car for personal use you probably won’t be covered for vehicles that you borrow or lease. Here are two options for this type of situation:
- Purchase a Named Non-Owner Auto Policy. These policies are for those who do not own any automobiles but desire coverage for autos that they borrow or rent in their name. Coverage may be limited and some coverage exclusions may apply, so be sure to ask questions of your agent with regard to this policy.
- Have your company add you to its business auto policy with a Drive Other Car endorsement. It adds the person(s) named in the endorsement and their spouse while using a covered auto for personal use. Again, coverage may be limited and exclusions may apply.
There are a few other options available depending on your personal situation. Wherever possible your best bet is to purchase a personal auto policy. It is difficult to match the insurance coverages included in a personal auto policy when it comes to the situations listed above. Another advantage of purchasing a personal auto policy is that in recent times, the homeowner insurance market has seen a rapid rise in premiums. Purchasing a personal auto policy can save you money on your homeowners insurance as most companies provide multi-policy discounts.
Insurance coverage for you and your company car can be complicated. The options I’ve noted here are just a few that are available. Be sure to review your situation with your independent insurance agent to be sure you are protected.
The coverages described above are in the most general terms and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your independent agent.