Auto Liability Insurance: A Must-Have For Many Jobs

Many jobs require auto liability insurance because employers are responsible for protecting their employees and their company. If an employee gets into an accident while on the job and their auto insurance cannot cover the costs of injuries and property damage, the employer can be held liable for the difference. This is known as vicarious liability. To avoid this, employers may require employees to have a certain level of auto insurance coverage and provide proof of insurance. This is especially important for jobs that require extensive driving, such as real estate agents, salespeople, and delivery drivers.

Employers can be held liable for employee accidents

In such cases, the legal theory of "respondeat superior" (Latin for "let the superior answer") applies, making the employer answerable for the employee's misconduct. This theory holds employers responsible for the costs of doing business, including the financial implications of employee negligence or misconduct.

However, if the employee acted independently or out of personal motives, the employer might not be held liable. For instance, if an employee uses a company car for personal errands after work hours and causes an accident, the employer is less likely to be considered responsible.

To protect themselves, employers can require employees who drive for work to maintain sufficient auto insurance coverage and verify their compliance. Employers can also implement a commercial auto insurance policy, which covers company-owned vehicles and any liabilities associated with them during work-related operations.

Additionally, employers should be cautious when hiring and retaining employees. Negligent hiring or retention occurs when an employer fails to conduct adequate background checks or keeps an employee who is unsuited for the job, respectively. This can lead to employer liability if the employee causes harm.

Employers can require a minimum level of auto insurance

Employers can and should set a minimum level of auto insurance for their employees who drive as part of their job. This includes employees who drive company cars and their own personal vehicles for work purposes. By setting a minimum coverage level, employers can protect themselves and their companies from the financial risks associated with car accidents.

Motor vehicle accidents are a leading cause of occupational fatalities, with over 2,000 employees killed annually in the United States. In 2019, motor vehicle accidents cost employers a staggering $72.2 billion in the US alone. As such, employers have a responsibility to ensure their employees have adequate insurance coverage.

When an employee causes an accident during work hours and their auto insurance cannot cover the full costs of injuries and property damage, the employer may be held liable for the remaining amount. This is known as vicarious liability. To avoid this situation, employers should calculate and mandate a minimum level of auto insurance coverage for their employees who drive as part of their job.

The minimum auto insurance coverage required by states is often insufficient in the event of a serious accident. For example, a 25/75/25 policy would cover the driver up to $25,000 per injured person, $75,000 in total injuries, and $25,000 in property damage. However, if the total cost of the accident exceeds these limits, the company may be responsible for the remaining amount.

To protect themselves, employers should set a minimum required auto insurance coverage for their employees who drive as part of their job. A recommended minimum coverage level is 100/300/50, with a best practice level of 250/500/100. Employers should also verify their employees' auto insurance coverage every six months to ensure compliance and that the policy is up-to-date.

By requiring employees to maintain sufficient auto insurance and regularly verifying their compliance, employers can protect both their company and their employees from financial risks associated with car accidents.

Commercial auto insurance is necessary for work vehicles

Commercial vehicles are typically exposed to more risk than personal vehicles, and as such, require a separate insurance policy. This is true even if the vehicle is an employee's personal car being used for business purposes. If an employee is in an accident while driving for work, and their personal insurance cannot cover the costs, the employer may be held liable for the difference.

Commercial auto insurance covers the business's liabilities associated with work-related operations, including bodily injuries and property damage caused by the company vehicle. It also covers physical damage to the company vehicle, such as repairs or replacement in the case of accidents, theft, vandalism, or fire.

Additionally, commercial auto insurance can provide coverage for hired or rented vehicles used for work, as well as non-owned vehicle coverage, which extends protection to employees' personal cars when used for business. This ensures that both the business and its employees are protected in the event of an accident.

By having commercial auto insurance, businesses can safeguard themselves from financial losses, legal fees, and damage claims. It is a necessary safeguard for any company that uses vehicles as part of its operations, helping to protect the business, its employees, and the public.

Employers can ask for proof of insurance

Employers can and often will ask for proof of auto insurance, especially if you drive your personal vehicle for work. This is to protect themselves from liability or financial responsibility if you are involved in a crash during work hours. If your insurance cannot cover the costs of injuries and property damage, the employer can be held liable for the difference.

Proof of insurance is documentation that proves your car insurance policy is valid and up-to-date. It is typically provided in the form of a letter or an ID card, and includes the names of everyone insured under the policy, vehicle information, the policy number, the amount of coverage, premiums, and the start and end date of the policy. Many insurance companies also provide access to a mobile app that allows you to easily access digital proof of insurance from your device.

Your employer may ask for proof of insurance when you are operating your vehicle to perform tasks related to your job. They may also ask for proof of insurance to make sure that you have enough coverage to drive to and from work.

If you drive a company-owned vehicle for work, your employer has likely already added you to a commercial insurance policy. However, if you drive a personal car as part of your job, your employer will want to ensure that you have your own insurance policy.

It is important to note that some lawyers argue that requiring proof of insurance from employees edges close to subtle discrimination and may not always be enforceable. Nonetheless, employers can require employees to carry a specific amount of auto insurance coverage on their personal vehicles, provided that the employer pays for the upgrade by incorporating the higher insurance premium into the employee's car allowance or vehicle reimbursement.

Employees driving personal vehicles for work may need additional coverage

Employees driving their personal vehicles for work may need additional coverage because their personal auto insurance may not cover them in the event of a collision. This is because a personal auto policy is not designed to cover an employee using their vehicle for business purposes.

In the case of a collision, the employee's policy would likely deny coverage of physical damage and bodily injury claims due to policy exclusions such as business use of a personal vehicle. Therefore, it is recommended that employees add an endorsement to their policy that covers the use of a personal vehicle for business purposes. However, not all insurance companies offer protection for limited business use, and this type of endorsement can be costly.

To mitigate risk, employers can take the following steps:

• Encourage employees to obtain and review their policy exclusions regarding business use before using their personal vehicle for work purposes.
• If business use is excluded, employees should consider purchasing an endorsement that would allow it.
• Investigate the actions of the employee prior to the collision. For example, if the employee was on their way back to work, their actions might be covered in some personal policies since the business task has already been completed.
• Consider adding Symbol 9 coverage to your policy, which provides liability coverage for the insured employer and their employee when using their personal vehicle in the course and scope of their employment.

It is also important to note that employers can be held liable for damages if an employee causes an accident while using their personal vehicle for work-related purposes. This is known as vicarious liability. Therefore, it is crucial for employers to ensure their employees have sufficient auto insurance coverage and to verify their compliance regularly.

Frequently asked questions