Articles

The hidden dangers of personal vehicle use for work


While adopting telematic systems, dashcams, and strong, enforced policies have helped employers reduce dangerous driving behaviors and phone distractions among fleet drivers, less attention is given to workers who use their personal vehicle for work. Yet, workers comp and liability claims involving personal vehicles pose a greater risk to employers because they can fall into gray areas regarding insurance coverage and employer responsibility.

Often underestimated, the frequency of personal vehicle-related claims results in significant costs. Workers Comp lost time auto claims average over $35,000 and fatality claims can exceed $400,000. Cost drivers for personal vehicle-related claims include injury severity (less vehicle safety equipment, injuries to multiple body parts), disputes over compensability and attorney involvement (work-relatedness), delays in reporting, and lack of employee cooperation in subrogation efforts.

For workers comp coverage, the key is determining whether the accident arose out of and occurred in the course of employment - the employee was engaged in work-related activities at the time, the accident happened at a location they were expected to be, and the employee was doing something for the benefit of the employer or otherwise acting under the employer's direction. While the laws vary by state, since workers comp is no-fault, if the employee caused the accident they may still be covered if the incident occurred in the course of employment. Even where there is a clear violation of company policies, it can be challenging to prove the violation was the cause of the accident. Generally commuting to and from work and running a personal errand unrelated to work when the accident occurs are not covered.

Some professions, such as home healthcare aides, sales reps, and social workers, use personal vehicles regularly. Still others may only use them occasionally to drive to client meetings or a conference, make a delivery, or run an errand at the employer's request. Even when using a personal vehicle is occasional, employers face potential liability if there's an accident.

To protect themselves, employers should take the following steps:

  1. Develop a clear, written personal vehicle use policy
    1. State the policy's purpose and that it applies to all employees using personal vehicles for any work-related task. Define what is and what is not approved for business use. Consider such issues as carpooling, transporting unauthorized passengers, and using the vehicle for personal errands during work trips.
    2. Specify driver and insurance requirements. Require and define a clean driving record, require notification of any change in license status or citations received, specify minimum liability coverage, require proof of insurance and update it annually, and consider requesting the company be listed as an "additional interest" on the policy for notification of cancellation. Ensure the employee understands the employer is not responsible for damage to the vehicle and encourage the employee to review their policy implications with their insurer.
    3. Stipulate driver safety expectations: seat belts, traffic laws, prohibit texting, speeding, driving under the influence, unsafe or aggressive driving, etc.
    4. Require the vehicle be legally registered, properly maintained by the employee, and in safe operating condition.
    5. Explain the process and rates for mileage and expense reimbursement.
    6. Outline the procedures if an accident occurs during business use: Collect identification and insurance information of other drivers, report to local authorities, the auto insurer, and employer within 24 hours. Capture relevant photos of damage, signage, road conditions, etc. Require a written incident report including information on other vehicles/drivers involved and witnesses.
    7. Specify when injuries may be covered under workers comp and that injured workers are expected to cooperate with subrogation efforts.
    8. Have the employee sign that they acknowledge they've read and understood the policy and agree to comply.
  2. Provide driver safety training and promote safe driving practices
    1. Offer defensive driving courses for employees who regularly drive for work.
    2. Issue frequent reminders that promote safe driving practices and regular vehicle maintenance.
  3. Limit or avoid high-risk use
    1. Consider using company-owned vehicles for frequently transporting clients, materials, or tools.
  4. Purchase Hired and Non-Owned Auto (HNOA) Insurance
    1. This is coverage that protects the business if it is sued due to an accident involving a vehicle the company doesn't own. It does not cover the employee or their vehicle.
    2. It is sometimes added as an endorsement to a commercial general liability or business auto policy.
  5. Document business use
    1. Have employees regularly submit reports showing detailed trip logs when their vehicle was used for work. This helps for insurance, taxes, and gives a clear picture of the company's exposure.
  6. Do a post-crash investigation
    1. Contributing factors like weather, road conditions, driver behavior, and vehicle conditions should be considered in the analysis.
  7. Be aware of the growing trend of staged or fraudulent accidents
    1. Staged auto accidents are intentional collisions, often orchestrated by individuals or organized groups, designed to appear as genuine accidents to file fraudulent insurance claims. The employee may be an incident victim of a staged accident or trying to shift medical and lost wage liability from their auto insurance to workers comp.