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Protecting a company when employees use their personal vehicles on company business

If employees use their personal vehicles on company business, do they need to be added to the company’s automobile policy?

In point of fact in Canada a vehicle must be registered and insured in the same name. For a personal vehicle registered to an individual (employee), the auto insurance must be placed by the individual through a personal auto policy; similarly for vehicles registered to a business, the business must buy a commercial auto policy.

If an employee driving on company business is involved in an accident, the personal auto policy placed by the employee would respond as the primary insurance to collision and third party liability claims.  There may be circumstances where the primary insurance is inadequate (for example the limit carried is lower than the claim or settlement) or the claim is denied (for example impaired driving is excluded for coverage). In order to protect the company in these instances, the company’s Commercial General Liability policy must be endorsed to include an S.P.F. No 6 – Standard Non-Owned Auto Policy, which will defend and indemnify the company if named in a third party claim involving a non-owned vehicle.

Good risk management practices for employers whose employees drive their own vehicles on company business can include the following requirements: personal vehicles are to be maintained in safe, roadworthy conditions; the employee must notify their auto insurer that their vehicle is used for business purposes, and the employee must carry a minimum of $1,000,000 (preferably $2,000,000) Auto Liability Insurance.  If an employee is involved in an accident while driving on company business, in addition to reporting it to their auto insurer, they should also notify the company.  Some employers may also require the employee to provide an annual provincial Driver Record, which outlines any current convictions, discharges or other actions or restrictions on the employee’s licence, and any company business driving limitations can be determined accordingly.

Contact INTECH for further information and assistance.

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