Fleet Management: Do I Need Proof of Personal Auto Insurance from My Employees?

As a best practice for fleet management and often a condition for coverage, many carriers require employers verify the personal auto insurance for employees who may drive their own vehicle on behalf of the business.

Best Practices for Proper Fleet Management Coverage

In cases of employees using personal vehicles for required business purposes, the vehicle owner should confirm their personal insurance can cover any potential losses from the anticipated use of the vehicle. Verification of the employee’s proper licensing, registration, and insurance coverage is the responsibility of the employer.

The  hired/non-owned auto liability coverage included on your business auto policy acts as excess over any other collectible insurance but does not replace the personal auto insurance held by the vehicle owner. You as the employer are vicariously liable for the acts of your  employees. This is a commonly overlooked exposure, but really an employer should qualify and manage employees driving their personal autos on behalf of the business just as diligently as they would an employee driving a company owned vehicle.

Verifying appropriate levels of personal auto insurance protects your employee as an individual and acts as a buffer before the company’s policy would need to respond in the event of a claim.

Most carriers like to see minimum personal limits of at least: $100,000/$300,000/S100,000 (bodily Injury per person/bodily injury per accident/property damage); however, that can be adjusted depending on the associated hazards (type of vehicle, type/frequency of driving, distance traveled, passengers, etc.).

As the business owner, you simply request  a copy of the employee’s personal auto declarations page  before the employee may drive, and then at each policy renewal thereafter. It is also advisable to ask your staff to confirm their policy has no business exclusions based on how their vehicle will be utilized.

What is an MVR?

Additionally, your company policy may prohibit employees from driving their personal vehicle for business purposes until certain requirements have been met such as completion of a driver safety checklist or evaluation of the driver’s MVR.

An MVR is a state-issued summary of past moving violations and police-reported collisions. This report can be obtained directly from a state department of motor vehicles (DMV) or through a private firm in the business of providing personal information. An individual can request their own MVR online with the CA DMV at a cost of $2 Request Your Driver’s Record – California DMV  You should notify your employee and get their consent before requesting and examining the report. Failure to know your employees’ driving history  increases your business’ exposure to liability and in the event of a serious accident, punitive damages which are uninsurable.

M&G is Here to Help

As a business owner, it’s your duty to ensure you are placing safe, capable, and fully insured drivers on the road to conduct your business. Knowing your business is protected and your fleet is trained, insured, and carrying a clean driving record is essential.

For more questions on managing your fleet’s preparedness on the road, you can get in touch with our team of expert Risk Advisors at Morris & Garritano by emailing Nick Sullivan, our Risk Management Director, at nsullivan@morrisgarritano.com.