Risk of Inadequate Liability Coverage
Martin drives an employer-supplied car. He does not own his car and, therefore, does not have personal auto insurance. Martin’s roommate Sam asked Martin if he could drive Sam’s car into the city so they could head out for a weekend getaway. Martin gladly agreed. While transporting his Sam’s car, Martin swerves into oncoming traffic to miss hitting a dog that runs across the street. He causes injury to the other driver and later finds out they filed a lawsuit for damages. The liability limits on his friend’s car are the state-required minimums and are not enough to cover the legal expenses and pending legal settlement. Without his own insurance, Martin is personally responsible for covering the loss.
Exposure to Medical Payments or Under/Uninsured Motorist
Employees and their spouses are typically covered by the business auto policy when driving a company-owned vehicle for personal use. Since this is their only car, they do not have personal auto insurance. Kara and her parents have permission to drive her dad’s company car for personal use. Kara’s friend, Jamie, invites her to ride with her to the local basketball game. On their way back, Jamie’s car gets struck by an uninsured motorist. Kara is seriously injured. Jamie’s policy has her state’s minimum limits for uninsured motorists, so it does not provide much protection. Several expensive medical bills resulted from the injuries Kara received during the accident. Since Jamie’s auto coverage is insufficient, Kara’s parents must pay the bills out of pocket.
Risk of No Coverage for Physical Damages
Scott decided it was time to add another family car to the household since his wife’s company provided the only family car. Scott’s friend Matt was selling his sports car. Scott thought it would be great fun to drive on the weekends and decided to give it a test drive. Scott did not realize that Matt had removed insurance coverage from the car since he was not currently driving it. While on the test drive, Scott took a corner too fast, spun out, and drifted off the road into a tree. Even though nobody was hurt, the car suffered extensive damage. Scott ended up purchasing the damaged car since it was his fault, but he did not have a personal auto policy in place to repair or replace the damaged car.
What does a Drive Other Car endorsem*nt cover?
Borrowed or rented automobiles may not have adequate policy limits, leaving the driver uninsured or underinsured. The Drive other Car policy endorsem*nt provides six types of coverage for the driver of a non-company-owned vehicle.
Drive other Car coverage provides coverage for:
- Covered autos liability
- Auto medical payments
- Comprehensive coverage
- Collision
- Uninsured motorist
- Underinsured motorist
Drive other car endorsem*nts are not blanket endorsem*nts. They do not cover everyone in the company that drives a company car unless they are named on the policy.
Extending coverage: The endorsem*nt allows the named insured to designate the individual(s) who are insured by the broadened coverage.
What is the purpose of Drive Other Car coverage?
Accordng to Donald S. Malencki, CPCU
Drive other car coverage is only necessary when that employee drives an auto belonging to another person who may not maintain insurance or whose insurance limits are inadequate.
Drive other Car coverage protects company employees from financial loss if they are in an accident in a non-owned company vehicle.
Does my car insurance let me drive other cars?
Your auto insurance follows the vehicle and not the driver, so as a driver car you drive is not dictated by your insurance. The insurance coverage is determined by the policy terms of that vehicle, no matter who is driving. Financial risk arises when the policy for the vehicle has limited or no coverage. As the car’s driver, the responsibility would be to pay for damages and losses if the policy’s limits were insufficient.
If your company does not extend coverage with a Drive other Car endorsem*nts, you may wonder what to do. Suppose your company does not offer this coverage. In that case, there is also the option to purchase a non-owned named operator policy that provides personal protection for individuals who do not own a car to get personal auto protection. Talk to your insurance advisor for more information.
