Understanding Non-Owned Auto Coverage

Last Updated:
December 3, 2020
Ole Jensen
Time to Read:

Does your business have potential automobile loss exposures that you aren't aware of? You’ve taken all of the necessary steps to ensure that your own fleet operation is properly covered in the event of an accident but what about the potential loss that arises from employees who operate their own personal vehicles for company business?

There are many situations that may cause you to be held accountable for the actions of your employees while they are driving their own vehicles.

Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
Do you occasionally send an employee to pick up a visiting client at the airport?
Have you sent employees to pick up lunch, drop off mail or pick up office supplies?
Have you ever rented a vehicle while on a business trip?
Do you have a sales force to which you provide a car allowance for business use of their personal vehicles?

If an employee has an accident under any of these situations, your business can be held accountable and may be sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business. Your best protection in Ontario: non-owned auto coverage. This type of coverage will kick in if there is an accident and your company is found legally liable.

Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using his or her own vehicle on company business.

However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage you may be vulnerable to a costly exposure.

Non-owned auto insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage can be added to your business automobile policy or added to your general liability policy. It protects your company if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business.

What is non-owned auto coverage in Ontario?

Non-owned auto coverage provides insurance protection when an employee occasionally has to drive his or her personally owned vehicle for business purposes. It assumes that the vehicle is not owned, registered or contracted in your name or on your behalf.

Who needs non owned auto coverage in Ontario?

If you or your employees ever drive vehicles not owned by your business for business purposes, then you need non-owned and hired automobile coverage.

If you do not already have this type of coverage and your employees occasionally use their own vehicles for business purposes — even quick errands — consider adding it to your business insurance package today.

Consult with Scrivens to review your business automobile and general liability policies to ensure you have adequate coverage and liability limits for Ontario non-owned auto coverage.