Four key auto endorsements
There are a hundred plus endorsements that you can get with your business auto policy. This huge number of endorsements can make it hard to decide which ones you should consider. There are four endorsements that any insured should consider when buying a business auto policy, including gap coverage, Employees as Insureds coverage, Rental Reimbursement, and Fellow Employee coverage.
1.Employees as Insureds
If you own a business with multiple employees, then you might be exposed to a great deal of risk. Your employees will probably end up driving to help your business. For example, if you have a post office box and your receptionist goes to pick up the mail. Unfortunately, some business auto policies will not cover your liability during this period. If your employee is driving for your business, then you can be held liable for their actions.
If your employee is in an accident while working for you, then you may not be fully covered. Your BAP will only cover you for the use of the vehicle. Meanwhile, your employee’s coverage will protect the employee, but only if they are using the car for personal use. When the insurance adjusters begin to investigate it is likely that your employee will end up in a bind.
To protect your employees and yourself, you’ll need a Employees as Insureds endorsement. This endorsement will cover your employees even if the auto is owned by them. This removes the potential gap and can save yourself and employees a lot of heartaches and financial distress.
2. Fellow Employee Coverage
If one of your employees injures another employee while they are working for your company, then the at-fault employee will need protection. If your employee causes an auto-related accident that hurts a fellow employee, then they might have no protection. This will eventually happen, and when it does the employee that is ruled at fault could bear the full liability. This happens because BAP’s usually do not cover employee injuries. BAP policy issuers believe that you should cover employee injury through other insurance, namely workers’ compensation and Employer’s Liability insurance. Unfortunately, employees that are driving a vehicle when they injure their fellow employee may not be covered by their own insurance. There are three key reasons these claims get denied.
The employee’s auto insurance could deny the claim because they were driving for business reasons in their own car.
The employee was driving a company car during the accident. They may not have the right endorsement on their personal auto policy. If they aren’t covered for a non-owned vehicle, then they likely won’t be covered
The accident happens in a rental car while on a business trip, and the at-fault employee does not have coverage.
These are all considered workplace injuries and your Workers’ compensation coverage should come into effect, but the injured employee can still sue the at-fault employee. The at-fault employee may have to pay out-of-pocket for the injured employee’s injuries.
Liability cases can get complicated and without coverage, your employees may have to sue each other. These lawsuits can wreak havoc on a workplace. Even offices that normally work well together will become divided. This division will destroy your productivity. Fellow Employee Coverage will cover your employee during this case. This coverage can keep the peace in your office and protect yourself from lost productivity.
If you have employees driving company vehicles or rentals, then you should have this endorsement.
3. Auto Loan/Lease Gap Coverage
Gap insurance has become increasingly popular with personal vehicles. When people buy a car they are usually offered gap coverage. This coverage will cover the difference between the value of the vehicle and the amount owed on it. Essentially, the coverage protects insureds that are upside down. There are several important details to remember about gap insurance.
The coverage only applies to a total loss.
Your payout will be determined exclusively by the value of the vehicle.
The coverage only applies to your current loan and will not cover other expenses. These expenses can include usage penalties, overdue payments, add-on costs, security deposits, and other loans against the vehicle.
With these details in mind, gap insurance is often a good idea. Vehicles drop in value extremely quickly, so if you are paying off a standard loan, then your gap should be substantial for more than a year. If you can’t afford to lose money on a vehicle, then you should strongly consider gap insurance.
4. Rental Reimbursement
When your car is in an accident it can be extremely frustrating. This is true whether it is your personal vehicle or a business vehicle. Even in a small accident, you could lose access to this vehicle for several days. Your vehicle will be covered by the BAP, but the ability to use a vehicle is not covered.
Most businesses cannot afford to go without a vehicle for multiple days. You will probably need a rental, but without Rental Reimbursement Coverage, your business will foot the bill.
Rental Reimbursement Coverage helps reimburse you for your rental vehicle. This coverage will pay for your rental while the covered vehicle is being fixed. Usually, this policy is subject to a maximum daily cost, maximum total, and a maximum number of days for each vehicle.
The coverage limits on this endorsement depend on the vehicle. Sedans will usually be covered at $30 a day, but dump trucks can cost $500 to $600. Do your research before signing on to this policy
One final provision to consider when looking at this coverage. The coverage will not be extended if you have access to a backup vehicle. Most insureds will not have a backup vehicle, but they should be aware of this clause.
These endorsements are extremely important when buying a BAP. You should look over all four auto endorsements before buying your insurance. Picking the right endorsements will ensure that your company is protected should the worst case scenario happen. You simply cannot afford not to look over your coverage and pick the right auto endorsements.