Assurex E&O Plus | Using Personal Autos for Our Employers
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Using Personal Autos for Our Employers

19 May Using Personal Autos for Our Employers

Posted at 08:30h in E&O Plus Blog by

Most of us have used our personal autos for our employer’s business. Some of us do it occasionally and some regularly. There have been cases in which an employee caused an accident and both the employee and employer were sued or had a claim made against them. Where do we find coverage for both parties? For purposes of this discussion, we will use the ISO Personal and Business Auto Policies for reference.

The Personal Auto Policy Liability Insuring Agreement states: “We will pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident.” Some questions we would need to ask include:

  • Is there “bodily injury” or “property damage?”
  • Is the person or organization an “insured?”
  • Is the person or organization legally responsible?
  • Was there an auto accident?
It is important to determine if the person or organization is an “insured.”

The PAP liability definition of “insured” includes:

  • You (the named insured and resident spouse) and “family members”(residents related to you by blood, marriage, or adoption; a ward or foster child) for the ownership, maintenance, or use of any auto or “trailer”
  • Any person using “your covered auto”
  • For “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part
  • For any auto or “trailer,” other than “your covered auto,” any other person or organization but only with respect to legal responsibility for acts or omissions of you or any “family member” for whom coverage is afforded under this Part. This provision (B.4.) applies only if the person or organization does not own or hire the auto or “trailer.”
Is the employer legally responsible for the acts of an employee? Under the legal doctrine known as “respondeat superior,” (the master must answer) an employer is legally responsible for the acts of its employee when the employee is acting within the course and scope of employment. This is called “vicarious” liability. Based on item 3 of the definition, the employer is an “insured” on the employee’s Personal Auto Policy.

As an “insured” for vicarious liability, the employer gets primary liability coverage on the employee’s PAP and defense in addition to the policy limits. Because the employer and employee share the liability limits, this “dilutes” the employee’s coverage. Note: Not all PAPs would cover the employer or might only provide excess limits.

The employer could also have excess liability coverage on its BAP under “non-owned auto” coverage using symbols 1 any “auto” or 9 non-owned “autos” only. The employee is not covered by the employer’s policy unless endorsed. This can be accomplished by adding CA 99 33 Employees as Insureds. The endorsement would provide excess liability coverage for the employee.

Since the employee could share limits with the employer, it is important for the employee to carry high liability limits on the PAP. A Personal Umbrella policy should also be considered. Another option would be to use the risk management technique of avoidance and not use personally owned vehicles on behalf of employers.