Insurance & Employee Benefits
By William F. Schaake, CIC, CRM, CLCS
Coverage may be provided on many commercial auto & truck policies or BAP’s (business auto policies) and usually requires the same limits of auto/truck liability for third party coverage on scheduled vehicles. If no coverage is provided under a BAP, coverage may be obtained by endorsement on a BOP (business owner’s policy) or a CPP (commercial package policy), etc. Check with the carrier if it is available otherwise coverage may be obtained as a separate policy.
Many commercial auto and truck policies include hired and non-
Many BOP and CPP carriers will not offer coverage for hired and non-
Both lines of coverage provide legal defense for the company, usually chosen by the insurance carrier providing coverage. This may be different than providing defense costs as the latter implies the choice of attorneys is at the discretion of the insured and often the carrier may limit the selection to its own counsel. Coverage may not be available to protect the interests of the employees, the physical damage of the vehicle, or the contents in the vehicle.
Organizations with large fleets or that rent vehicles on a regular basis may purchase this coverage on an annual basis for an aggregate amount. A cost savings may be apparent compared to purchasing it for each rental, however, companies commonly purchase this protection through the rental agreements on a daily or short term basis. If purchased on an annual basis with a maximum limit, it is important to adjust the amounts to the exposure by raising the limits to the values if the values increase. A $ 30,000 limit would probably not cover the total loss of an exotic sport car rented for an executive, unless the value is less than the stated amount.
In addition, the recovery methods may differ from one policy to another. The “Actual Cash Value” method for vehicles may not contemplate the increased value caused by the demand, or the diminution in value if the car is damaged, therefore it may be important to examine any difference in what the valuation of the vehicle is compared to the level of coverage. Agreed and stated valuation methods may not be available, but if available, may provide a better alternative to Actual Cash Value. The terms of the lease and rental agreement become important to determine how the value of the vehicle is determined.
“Loss of Use” expenses may be due to the rental agency if the vehicle is damaged and there is a financial loss to the agency for the inability to rent it to another party. Many policies offer an amount of coverage of only $ 20 per day up to $ 600 maximum. This amount may not be enough to cover what the rental agency could have rented the vehicle to someone else, hence the difference may be the responsibility of the renter so it is important to check the rental contract.
Finally, it is important to add “Employee Hired Auto” endorsement if employees are renting the vehicle in their names for the organization’s use.