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Woman on the phone at the scene of the accidentDetermining who’s fault in an accident involving a business vehicle can be tricky. Most of the time, your commercial auto insurance or business insurance company can help defend against claims made against you. But, what if your employees use their own cars for business needs? Could this lead to a lawsuit against your company that liability coverage won’t cover?

Here’s the Scenario

An employee uses his or her car for business needs. This is arrangement can be acceptable for a business if they’ve taken the time to ensure the employee’s liability insurance may provide protection. During the course of operation, the employee is in an accident in which another person — a third party —is hurt. To recoup from the financial loss, that third party must file a claim against the employee’s car insurance. This may include funds to pay medical bills or to cover lost time at work. Can the employee’s car insurance policy cover the losses?

This depends on what type of insurance the employee has. If they simply have a standard auto insurance plan, it is possible their insurer will deny the claim; in this situation, the employer could be responsible for paying for the damages. This would occur if the employee was on the clock while the incident occurred. However, an employee in this scenario should still have a rider added to his or her auto insurance policy stating specifically that the business has a policy to cover these types of damages.

What You Need to Do Now

If you are a business owner and your employees drive their personal vehicles on a regular basis, you should ensure a rider is added to the employee’s plan in order to cover your business. This rider should be an important part of your business insurance because it helps to alleviate some of the risk associated to vehicle accidents. Generally, this type of plan provides liability insurance, but it can offer property insurance for the employee’s vehicle. Be sure that a comprehensive plan is in place to minimize the risks to your company.

Call us at (512) 771-6091 today to learn more about the Dallas commercial auto insurance we offer.

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