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An office errand and your business auto insurance

Woman driving Do any of your employees run errands for you? Sometimes a business owner can be faced with a liability exposure and not even know it.

Consider these scenarios:

  • Your office manager stops by Office Depot to pick up some supplies for work on her way back from lunch.
  • On the way home, your salesperson stops by a client’s office to get some paperwork signed.
  • Your receptionist stops at the bank during lunch to make a business deposit.

What if they were involved in an automobile accident along the way?

Whose policy do you think would cover the loss?

Whose policy would cover the defense costs?

Who would pay for the damages to the employee’s vehicle?

Well, in Iowa, insurance follows the vehicle. Therefore, typically the employee’s vehicle would cover the loss first and then they may turn to the business.

Now I did say typically. What I mean by this is that it does depend upon what type of policy the business owner has and what their policy language states. Business auto policies are determined by how you have designated your insurance.

In general, you have three options for which vehicles you choose to cover.

  • Autos your business owns
  • All autos your business owns, hires or leases
  • All autos used for the business, including those that your business does not own, hire or lease

It also depends on if you have employees listed as insureds and if you have Non-Owned Liability. Non-owned liability can act as excess over your employees personal policy.

For example, if your employee’s personal policy is not enough to cover the damages in the loss, then your business policy can pick of the difference up to your policy limits.

These are key factors that should be addressed prior to taking out a business auto policy or when you are completing your annual review. There are many other aspects to a business auto policy as well so stay tuned…

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