Why managing a non-owned fleet might not be the best way to control your loss.
Maintaining a company fleet isn’t easy. You have to consider commercial insurance, maintenance costs, after-hours usage agreements, and administration of your vehicles. It might seem like a great solution to just have your employees use their personal vehicles for business and give them a car allowance instead of owning your own vehicles.
Vehicles that aren’t owned, rented, borrowed, or leased by your business – but are still used for business purposes – are known as non-owned vehicles. Is this the best loss management solution? No! Here’s why.
When you choose non-owned autos, you don’t move risk of loss away from your business. Instead, you hold onto the risk while minimizing your control over it. When you have your own fleet, you have your own commercial auto insurance tailored to protect it. When you choose non-owned autos, you run the risk of your employee’s coverage being insufficient to cover damages they cause while driving on the job. That is, if it covers those damages at all. Many personal auto insurance policies will specifically exclude coverage for business use.
Under “Respondeat Superior”, which is the legal doctrine which states that in many circumstances an employer is responsible for the actions of employees performed within the course of their employment. Your business could be on the hook for the full expense of the accident your employee gets into in his or her own personal vehicle.
That doesn’t mean non-owned auto is a bad idea for your business, but it does mean you need to talk to a California commercial insurance agent about protecting your business against loss whether or not you own your own vehicles. For insider insight into the commercial auto insurance needs of your unique business, contact Hoffman Brown Company in Sherman Oaks.