Does Your Auto Insurance Cover You For Work-Related Driving?

Your company asks you to deliver a package to the post office on your way home from work and you’ll get 30 minutes of overtime pay. In the time that it takes you to drive to the post office, will your own auto insurance policy cover you, since this is technically a business-related trip?

If you get into an accident that causes $10,000 in damages and ends up in a $500,000 lawsuit from the other party, are you covered by your insurance liability coverage? Will you have to pay out of pocket or will your employer’s business insurance cover any extra costs that your insurance does not cover?

Most insurance policies will cover you when you drive your car to make a business delivery. However, there is an exception to this. If the delivery of goods or people comes with paying you a fee to drive, your personal vehicle insurance company will invalidate the coverage. This type of delivery for a fee is called “livery”.

Other points about coverage:

•    Share the ride expenses and mileage reimbursement does not void coverage.
•    Under most policies, general business use of a vehicle (transporting supplies, visiting customers, attending seminars) does not void coverage.
•    Under the business insurance policy regarding auto usage for business-related mileage, the business is covered for bodily injury and property damage.

The common law puts the responsibility on employers for the actions of their employees during this time. Typically, the business insurance policy covers autos that are owned by the company or vehicles owned by their employees when used for business. Employers should talk to their insurance carriers to know what the policy covers and if non-owned or rented vehicles are covered under this policy as well. If rented vehicles are used, employers may need to purchase an additional “vehicle rental” auto liability insurance.

Just like personal auto insurance, the business insurance may require the business to add individual employees onto the policy to be sure that that employee is insured when driving for business related trips. It would be best to talk to an insurance agent to understand what your business needs are and how to best cover employees that are driving for the company.

Being paid for mileage and getting a tax deduction on company business mileage is a plus, but you should know what your own insurance will cover if you’re involved in an accident while driving for the company. Also, ask your business what the business insurance will cover for employees who drive for company business.

Talk to your own insurance agent to learn what coverage you should carry or add on to your policy if you are making frequent trips for your company. If you are an employer, talk to your business insurance agent to see if you’ll need to add individual employees onto the auto liability portion of your policy. If your employees are making trips for the company, you should also check driving history to make sure that they are not a liability to the company.