California Property & Casualty Broker-AgentCasualty InsuranceMedium
A California business client operates a small manufacturing plant. They are purchasing a Commercial Auto Policy. The owner is concerned about liability arising from an employee using their personal vehicle for company business, such as making a bank deposit. Which endorsement or coverage would address this specific exposure?
- AHired Auto Coverage
- BGaragekeepers Coverage
- CNon-Owned Auto Coverage
- DDrive Other Car Coverage
Show answer & explanationAnswer & explanation
Correct answer: C. Non-Owned Auto Coverage
Non-Owned Auto Coverage in a Commercial Auto Policy provides liability coverage for the insured (the business) when an employee uses their personal vehicle for business purposes. The employee's personal auto policy would be primary, but the business's Non-Owned Auto coverage would step in as excess if the employee's limits are exhausted, or if the business is sued directly.
Why the other options are wrong
- A. Hired Auto Coverage applies to vehicles rented, leased, or borrowed by the business.
- B. Garagekeepers Coverage protects businesses that store or park customers' vehicles.
- D. Drive Other Car Coverage is for individuals, typically executives, who don't own a personal vehicle but drive company cars, providing personal auto-like coverage.
Non-Owned Auto Coverage
Non-Owned Auto Coverage in a Commercial Auto Policy provides liability protection for the business when employees use their personal vehicles for business-related activities.
- Covers the business's liability, not the employee's personal vehicle damage.
- Acts as excess coverage over the employee's personal auto policy.
- Crucial for businesses with employees who use their own cars for work tasks.
Memory trick: Auto Liability: Owned, Hired, Non-Owned, Covered!