There have been several conversations debating whether a business could be responsible for injuries and property damage that was caused by their employee or subcontractor who was driving their own personal auto or leased vehicle. The most common examples are when a single op DJ books a second gig for the same time slot or a larger multi-op DJ business that regularly assigns subcontractor DJs to perform at an event for their clients. Many feel their business cannot be responsible because their employee or subcontractor owns and insures their personally owned vehicle.
With the busy season upon us, it is a good time to address your actual exposure, the real risks to you and your business, and the options available to protect you. Your actual exposure is the legal expenses to defend or a judgment made against you if/when your employee or subcontractor drive their own vehicle for your business, get in an accident, and did not buy enough insurance. Your business can be held responsible for an accident caused by anyone driving their own vehicle if they are ‘going to’ or ‘coming from’ a location where you sent them to do a task, perform a service, or represent your business. As far-fetched as that sounds, it is referred to within the insurance industry as hired & non-owned auto liability. Many businesses have this uninsured exposure and do not realize it until they are served with a lawsuit. The good news is that the insurance industry tries to create insurance products to protect their customers, you, against exposures uncovered through our legal system when the event can be insurable. The coverage created by the insurance industry is called Hired & Non-Owned Auto Liability insurance. The annual cost to buy this coverage is less than $1.00 a day. If this happens to you and you do not have this insurance you will pay a lawyer more than the annual premium just to explain why you need to hire their firm to defend you.
Another example that is very common within most any business is having an employee drive their car to the post office, a bank, or to pick up lunch for you and your customer when that meeting is running longer than you expected. That dedicated employee is rushing to get back with that food for their boss or those checks to be processed for deposit. They took their eyes off the road just to make sure the items on the passenger seat weren’t shifting, got a little careless, and hit the pedestrian or high end luxury car crossing in front of them. Pedestrian injuries are usually quite severe and repairs for luxury cars are usually higher than the state required basic minimum liability limits and run out quickly. Most of us do not have enough personal auto liability coverage when injuries or damages exceed $100,000.
The logical response after opening that lawsuit just served to you is….How could my company be responsible? I don’t own and wasn’t driving that vehicle so I or my company can’t be accountable. The courts have made decisions and judgments on similar lawsuits. They basis for their findings usually follow the money. Where you have opportunity to profit you normally also take on additional risks. Given the fact that your 1099 or cash subcontractor, W-2 employee, or volunteer was at the location of the accident for the financial benefit of you or your company, you could also become financially responsible to fix that injured person or damaged vehicle.
I use these examples because they do occur thousands of times a day across our country. Whether your facts are identical or slightly similar it is a common occurrence. Employees drive their cars for their company and subcontractors use their vehicles to move gear almost every time. I underwrite DJ businesses every day and review websites regularly. I often see Bios highlighting their talented DJ professionals from which a client review and select an entertainer for their event. If/when they are driving for YOUR benefit, cause an accident, and exhaust their personal insurance limits you should expect even a brand new unseasoned lawyer will ask why the driver was driving where they were at the time of the accident. The driver will tell them because they can’t afford to pay those additional costs for any claim after their insurance runs out. Those lawyers will find you, have you served, and expect you to help make that injured party, their client, whole again. That is their job and they do it very well.
As I mentioned earlier, there is relief through insurance. There is a coverage called “Hired & Non-Owned Auto Liability Insurance”. The insurance industry only creates insurance coverages when there is an insurable need from their customers. If you currently have a commercial auto policy you should contact your insurance agent and confirm the Hired & Non-Owned endorsement is part of your auto policy. While speaking with that insurance agent, also confirm you have uninsured and underinsured auto coverage on your auto policy as well. That coverage protects you if the other driver caused the accident, you are injured, AND their auto insurance lapsed or they bought that state minimum limit and don’t have enough liability coverage for YOUR medical expenses.
Many of you drive your personal vehicle and do not have a commercial auto policy. You cannot add Hired & Non Owned Auto coverage to a personal insurance policy. It can only be added to either a commercial auto policy or your company’s general liability policy. I strongly suggest you call your general liability commercial insurance agent to remedy this exposure before you have anybody drive their own car for you again. Each insurance company will price this coverage differently and I did not survey options. I know Philadelphia Insurance Company (AM Best rated A++ superior) offers this coverage to their insured DJs for an annual premium of $294. They will also prorate that premium to $.81 for each day remaining on any existing DJ general liability policies. I believe Philadelphia Insurance Company insures more DJs on a master policy, with each DJ having their own individual limits, then all other DJ insurance options combined. You know if you have this exposure or you don’t. If you do, protect your assets appropriately. This value purchase for your business is a no brainer.
If you personally own and insure your vehicle, I suggest you ask your agent to quote you an umbrella policy. Personal umbrella premiums are also less than a $1.00 a day to purchase an additional $1,000,000 of insurance coverage.