Bridge Your Auto Policy Gap with Drive-other-car Coverage

Aug 22, 2023 | Business Insurance, Personal Insurance

If you provide company vehicles to your employees and they do not have their own personal automobile insurance policy, there may be a coverage gap. A drive other car endorsement is specifically designed to bridge this commercial auto liability insurance coverage gap, thus keeping you safe.


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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 in order 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 totalled in an accident, gap insurance kicks in. When you file a qualifying claim, your comprehensive or collision coverage will pay the ACV of your vehicle, less your deductible. The difference between the ACV of your vehicle and the outstanding balance of your loan or lease may then be paid by your gap coverage. If you have a limit on your gap coverage, it may only cover a portion of your outstanding balance if you owe far more on the vehicle than it is worth. It should be noted that gap coverage may not cover additional loan charges such as 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 for business purposes by the insured or its employees.

Employers can obtain hired non-owned coverage when an employee uses their personal 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 name of the company. 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 due to the fact that 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:

Require personal automobile insurance for all employees who are either issued or will drive company vehicles. This is accomplished by first including language in 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 personal auto insurance coverage. You can’t manage what you don’t understand!


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Examine the coverage provided on the endorsement to ensure that you understand what is included, as coverage varies greatly by insurance carrier. Liability, medical payments, uninsured motorist, and physical damage coverage are all options. Examine the endorsement to ensure that all employees and/or family members who do not have personal automobile policies are listed.

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.

Continue to plan properly, as one of the trickier aspects of insurance is commercial auto insurance 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.


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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?

All vehicles owned by a business owner are registered in the name of the company. The owner’s family goes on vacation and rents a car, but they do not purchase insurance and are involved in an accident. Is he or she protected?


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An executive borrows a friend’s minivan to relocate and gets into an accident. Is he or she protected?

Because the “covered auto,” or company-owned vehicle, was not involved in the accident in any of these scenarios, the business automobile policy provides no coverage. 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?

Require personal automobile insurance for all employees who are either issued or will drive company vehicles.

Inform Dan Lawrie Insurance Brokers of any employees or family members who do not have personal auto insurance.


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Examine the coverage provided on the endorsement to ensure you understand what is covered. Liability, medical payments, uninsured motorist, and physical damage coverage are all options. 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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Please notify Dan Lawrie Insurance Brokers of any individuals who are not listed on the schedule.

Proper planning is not by chance.

An agent who understands the industry can help you understand drive-other-car coverage and tailor your business auto policy to your specific requirements.

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