In the Driver’s Seat: Hired and Non-Owned Auto Coverage

Driving the car around town by night
Driving the car around town by night

By Mike Drew, The Reschini Group

“Hey, would you mind running these supplies over to the client across town?” asked the supervisor to the employee.

And with that simple question, a series of insurance-driven dominoes began to fall that, before it was all done, taught some valuable lessons in liability coverage and unexpected exposure.

The employee used his own personal car to make the delivery, but struck another car in an intersection on the way, resulting in multiple injuries to a third party.  In the months to follow, ambulance bills, medical expenses, surgical costs, lost wages, and a variety of other financial considerations began to accumulate – but what determines who pays for them?

Well, that depends on whether the employer who made the initial request carried Hired and Non-Owned auto coverage.  This subset of commercial auto insurance addresses just what it says – it protects an employer should another party come after it for recovery damages involving cases where an employee drives a vehicle not owned by the employer.

Many business people don’t understand the need for this specialized coverage, assuming that the employee’s personal auto insurance would cover damages.  While it’s true that a driver’s personal auto coverage may be the first to be tapped, it may not be sufficient to cover the costs of injuries, ongoing medical treatment, pain and suffering, or a fatality.

If the person involved in an accident is driving the vehicle because of an employer, even if the employer does not own the vehicle, the employer will be pursued for damages beyond the employee’s personal auto coverage.  Hired and Non-Owned coverage provides the protection needed in such situations.

Be sure about your coverage.  The professionals at The Reschini Group are well versed in commercial auto insurance and how you can be adequately protected, based on your business’ specific situation.  Contact us to learn more.  Because, simply stated, the complex world of commercial auto insurance can’t be simply stated.

Copyright 2016 The Reschini Group

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

E&O: Human Nature Can Be Expensive

By Kitti Peters, The Reschini Group

Errors and omissions.  Sounds like the human race in three little words.  We leave things out, we make mistakes.  Human nature, right?  Completely understandable and forgivable, right?

Wrong.  No.  Not when it comes to insurance, my friend.  In this world, human nature can be expensive.TRG_Erase Error

When completing an application and providing documentation as part of acquiring business-related insurance, if you leave out some item of material importance, or misrepresent facts – even if by an unintentional accident – and if that situation is discovered later, it could render the insurance policy null and void.  That means claims would not be paid, and you would need to secure a new policy.

Many insurers require specific applications for underwriting certain lines of business, to include language forcing the applicant to verify that the answers on the application are true and accurate and that all attachments and materials are considered representations and warranties of the applicant, and considered as physically attached to the policy.  The insurer’s application also implicates that the insurer – by agreeing and accepting all of this information – will issue a policy relying on the truth and accuracy of such representations and warranties.

In short, that means everything provided as part of the application had better be complete and truthful.  The temptation may exist to try and skirt conveying the full picture (as in stating incomplete revenues, or misrepresenting the number of employees) in order to lower the cost of insurance premiums.  But keep in mind that, should the full and accurate scope of the situation come to light, the cost may be far greater than any potential savings from misleading representations.

It is critical to understand the questions asked on an application and how best to answer them.  When requested to complete a specialized application other than an ACORD form, and to supply data requested for underwriting in conjunction with a specialized application, the need to consult a professional advisor becomes even more imperative.

The team at The Reschini Group can assist with the completion of the application and request and gather the information necessary for the company to underwrite the risk and comply with the representations and warranties in the application.  Contact us to learn more.

Copyright 2016 The Reschini Group

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.