For any business owner, having the right employees as a part of your team can be a crucial part in creating the culture and work environment of your business. The same can be said for your commercial auto insurance, as hiring the wrong driver could negatively affect your policy.
Whether you’re looking to expand your current operations or are reviewing your pre-existing auto policy, it can be important for business owners to know exactly what should go into choosing the right business drivers, as well as how it will affect their insurance.
At Berry Insurance, we’ve partnered with countless businesses across Massachusetts and New England to ensure their drivers have the best coverage for the right price.
In this article we’ll cover how drivers affect a commercial auto policy, how to update your policy with a new driver, and how your businesses and its drivers will be covered by the policy.
How to hire the right driver
While business owners will want to make sure they have the right drivers for their operations to guarantee productivity and efficiency, the records of their drivers will also play a large role in determining what you can expect from your commercial auto premium.
When adding a driver to a business’s auto policy, an insurance company's underwriter will review the driver’s records, accident history, and prior insurance claims to help determine the risk of insuring the driver. Whether drivers are transporting cargo, goods, or passengers, all business auto operations will come with some inherent risk, making an insurance underwriter’s assessment of the drivers a key factor in determining coverage and rates for the policy.
When looking to hire a driver for your own business, keep the following in mind as red flags insurers will look for to determine the risk of a driver:
- Driving under the influence
- Less than 6 years of driving experience
- Excessive speeding
- Reckless driving
- License suspension or revocation
- Cell phone use while driving
- Failure to obey traffic signs
Of course, nobody is perfect and insurers may be lenient on more minor infractions that pop up in a driver’s record. Though any repetitive violations - however minor they may appear - can indicate potential risk in the eyes of an insurance company.
This makes it important for you to properly assess a driver’s history in the hiring process, as your business may be denied coverage or have it limited from the risky driver when you go to add them to your auto policy. To view a prospective employee's driving record, employers would need to request an unattested Massachusetts driving record during the application process so they could judge the driver’s experience.
How to add employees to a commercial auto policy
If any of your employees are driving a vehicle for business use, they will need to be listed on your commercial auto policy. Any drivers or eligible drivers not included on a business's auto policy may not receive insurance coverage if they are involved in an accident - leaving your business responsible for any associated fees.
If you have a pre-existing business auto policy and are looking to add a newly hired driver, you will need to contact your insurance agency or provider to update the policy. Adding new drivers or changing which drivers are authorized to operate company vehicles can be an easy addition to any policy, but may result in changes to your policy rates.
How are employees covered by commercial auto insurance?
A commercial auto policy offers protections for your company vehicles and its drivers for liabilities associated with them during work-related operations.
Your employees and vehicles will receive coverage for many vehicle-related incidents, but there are still some limitations, exclusions, and optional coverages business owners should be aware of. These range from policy to policy, but here’s what you can generally expect:
What is covered:
- Liability for bodily injuries or property damages caused by your company vehicle
- Physical damages to your company vehicle
- Medical payments
- Coverage if you are involved in a hit-and-run
- Coverage if you are hit by an uninsured driver
- Hired auto liability for accidents caused with rented vehicles (optional)
- Non-owned auto liability for accidents from your employee using their car for your business (optional)
- Glass or windshield replacement
- Driving for personal reasons (damage only)
What is not covered:
- Business or personal property in your vehicle
- Mobile equipment
- Intentional bodily injury or property damage
- Completed operations (the work you have completed)
- Towing (optional)
- Rental reimbursement (optional)
- Pollution
- Driving for personal reasons (only liability excluded)
Are employees taking commercial vehicles home after work covered?
Generally if the business’s vehicle is used after work/for personal use by employees with permission from the business, the carrier will pay for damages to the vehicle.
However, the driver may not receive personal liability coverage if they don’t carry their own personal auto policy or if the business does not have additional liability endorsements. So, while liability on a commercial auto policy will extend to cover the commercial vehicle regardless of business or personal use, it may not extend to cover the driver.
For more information on exactly how employees using a company vehicle will be covered, check out this article: What You Need to Know When Supplying a Company-Owned Vehicle to an Employee.
Are employees using personal vehicles for business covered?
As business use of a personal vehicle would not receive coverage through a driver’s personal auto policy, you may be wondering if and how they would be covered by a commercial auto policy.
If you or your drivers are using personal or rented vehicles for business operations, they may not receive full coverage under your commercial auto policy, and you would require a supplemental policy or endorsements to extend insurance to personal vehicles. In addition to your standard commercial auto policy, you would require a hired and non-owned auto policy endorsement to cover personal, rented, leased, or borrowed vehicles used for work operations.
Keeping employees covered on the road
When you have employees driving for your business, it’s important to ensure they are the right fit for your organization and are receiving the proper coverage. Now that you know more about how drivers will affect your policy, how to add them, and how they will be covered, you can stay informed when obtaining or updating your commercial auto policy.
If your business is looking to obtain a commercial auto policy and are interested in how much it will cost, reach out to us today to receive your own quote.
Outside of new drivers, it’s important for any business owner to periodically review your policies. To learn more on what you should be looking for and when to update, read our guide on why you should review your commercial insurance annually.
