Personal Autos in Business, and Business Autos Used Personally.

In any traffic accident, two entities can be held liable for damages: the at-fault driver and the vehicle owner. Insurance companies generally view the vehicle's insurance to be primarily liable with the driver as secondary.

Let's assume you're an entrepreneur using your personal vehicle for company business. You are the owner of the car and the driver. Only one responsible party, right? No. Since you're using the car for business, the business can be held responsible since you're driving on its behalf.

So, who pays when the company has no automobile insurance?

The business pays all damages not covered by your personal insurance. Worse, the business pays for legal representation whether you are at fault or not.

The answer is simply to purchase hired and non-owned automobile liability, usually as an endorsement to your general liability policy if you have no automobile coverage. This add-on is inexpensive for small companies, but saves much heartache in the event of a major accident.

Now, let's look at the other side. Your business owns the car, and you drive it personally. If you do not have a personal auto policy, you are personally unprotected against the liability of car accidents.

The other driver will claim against you as an employee and the business as vehicle owner, both covered by business automobile insurance. If the claim extends to you personally, you may be liable for damages in excess of the business policy limits, plus all of your legal expenses.

The solution to this potential gap in coverage is a "drive other cars" endorsement which allows the business policy to act on behalf of the driver whether in a rental car, a borrowed car, or a car used in business. The endorsement will add only named people to the policy, it is not blanket coverage for all employees.

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