If you provide company vehicles to your employees and they do not have their automobile insurance policy, there may be a coverage gap. This endorsement actively bridges the commercial auto liability insurance coverage gap, ensuring your safety.
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What is the purpose of gap insurance?
Depreciation is protected by gap insurance. When you buy a car, its value begins to fall—sometimes significantly. If you finance or lease a vehicle, depreciation creates a gap between what you owe and the value of the vehicle. Consider the following example with and without gap insurance:
Remember that to qualify for gap insurance, your policy must include comprehensive and collision coverage. To learn more about gap insurance, check out our quick guide:
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What exactly does gap insurance cover?
When your vehicle is stolen or totaled in an accident, gap insurance comes into play. Your comprehensive or collision coverage, upon filing a qualifying claim, will pay the Actual Cash Value (ACV) of your vehicle, deducting your deductible. Gap coverage then steps in to cover the difference between the ACV of your vehicle and the remaining balance on your loan or lease. If your gap coverage has a limit, it may only cover a portion of the outstanding balance, especially if you owe more on the vehicle than its current value. Note that gap coverage might not include additional loan charges like finance or excess mileage.
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Remember that gap insurance does not cover other property or injuries sustained in an accident, nor does it cover engine failure or other repairs.
Drive Other Car Coverage Aids in Bridging Auto Insurance Other Car Coverage for Gap Drive
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Basics of Drive Other Car Coverage: So, what exactly is Drive Other Car Coverage? If you provide company-owned vehicles to your employees, they frequently do not have a second vehicle and thus do not have a personal automobile policy.
If an employee does not have a personal policy and drives a vehicle borrowed from a third party, drive-other-car coverage protects them in the event of an accident. As a result, you can lend out your car without feeling concerned.
Your drive-other-car coverage is supported by your business automobile policy. This only applies to those who have been scheduled.
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What Is the Difference Between Hired and Non-Owned Coverage?
The following are some key distinctions between hired non-owned coverage and drive-other-car coverage:
Hired Automobile coverage protects vehicles leased, rented, hired, or borrowed by the insured or its employees for business purposes.
Employers can obtain hired non-owned coverage when employees use their vehicle for business purposes.
I need to file a commercial auto liability claim. Does this imply that I am covered?
Consider the following scenarios to demonstrate how drive-other-car coverage applies:
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On vacation, a salesperson rents a car for personal use and damages another vehicle. Is he or she protected?
All vehicles owned by a business owner are registered in the company’s name. The owner’s family takes a vacation out of town and rents a car. They choose not to purchase coverage, and an accident occurs as a result. Is he or she protected?
An executive borrows a friend’s minivan to relocate and gets into an accident. Is he or she protected?
The business automobile policy provides no coverage in any of these scenarios. This is because the “covered auto,” or company-owned vehicle, was not involved in the accident. In these cases, a drive-other-car endorsement closes the exposure loop.
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Reduce Your Commercial Auto Liability Risk:
Consider the following commercial auto insurance tips and tricks to help you reduce your risk:
Make sure every employee issued or set to drive company vehicles has personal automobile insurance by incorporating the requirement into your company’s employee handbook.
Inform Metropolitan Risk Advisory of any employees or family members who do not have personal auto insurance. We recommend performing an audit at least once a year and keeping the results on file just in case. Make it a requirement for employees to notify HR in writing if they cancel their auto insurance coverage. You can’t manage what you don’t understand!
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Examine the endorsement to understand the included coverage, as insurance carriers vary in what they offer. Ensure you check for options such as liability, medical payments, uninsured motorists, and physical damage coverage. Verify that all employees and/or family members without personal automobile policies are listed in the endorsement.
Notify the carrier of any individuals who should be on the schedule but are not. Do this in writing so that you have written proof of your request. This entails emailing time and date stamps.
Hence, continue to plan properly, as one of the trickier aspects of insurance is commercial auto gap policy coverage. A Risk Advisor who understands your industry can assist you in comprehending drive-other-car coverage. This knowledge assists you in reducing your exposure to loss by endorsing your business automobile policy.
If you’re not protecting your business with a commercial auto gap policy, you’re doing it wrong. Get a quote today.
Are you protected?
Consider the following scenarios to demonstrate how drive-other-car coverage applies:
On vacation, a salesperson rents a car for personal use and damages another vehicle. Is he or she protected?
Thus, the business owner registers all vehicles owned by the company in the company’s name. The owner’s family goes on vacation, rents a car, does not purchase insurance, and becomes involved in an accident. Is he or she protected?
Without business insurance, you’re at serious risk. What happens if a fire or a natural disaster destroys everything? But if you add coverage, it’s like an umbrella that can protect you and your business when needed. Get a Quote
An executive borrows a friend’s minivan to relocate and gets into an accident. Is he or she protected?
The business automobile policy denies coverage in these scenarios because the accident did not involve the “covered auto” or company-owned vehicle. In these cases, a drive-other-car endorsement closes the exposure loop.
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What precautions should I take to limit my exposure?
In summary, require all employees issued or driving company vehicles to have personal automobile insurance. Inform Dan Lawrie Insurance Brokers of any employees or family members who do not have personal auto gap policies.
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Thus, examine the coverage on the endorsement to ensure you understand what is covered. Subsequently, medical payments, uninsured motorists, and physical damage coverage are all options. However, examine the endorsement to ensure that it includes all employees and/or family members who do not have personal automobile policies.
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However, please notify Dan Lawrie Insurance Brokers of any individuals who are not listed on the schedule.
Proper planning is not by chance.
In addition, an agent who understands the industry can help you understand drive-other-car coverage and tailor your business auto gap policy to your specific requirements.
Are you a business owner? Do you want to protect your company’s assets? Additionally, make sure your business is insured. Get a quote
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