By Amanda Duncan, President, PartnerOne Environmental
It’s a regular occurrence for an environmental underwriter: we offer a quotation for a contractor/consultant and then get asked to throw in some Hired and Non-Owned Auto coverage because the insured had no owned vehicles, yet needs the coverage. The environmental package products are unique because Hired and Non-Owned coverage can be added via an endorsement to the General Liability coverage part. Many times it’s a last minute request, right as you are going to bind up the deal. So we say “yes” add the endorsement, and we all move on. Until a claim comes in and wipes out the policy limit in the blink of an eye.
Understandably, insureds with no owned autos want to protect their company should an employee have a vehicular accident while on job in their own vehicle or in a hired or rented vehicle. Hired and Non-Owned Liability is often required via contract as well, thus the insured must have the coverage added to their existing insurance. Company principals should also consider that one Hired and Non-Owned claim can reduce their overall General Liability limit significantly. Insureds probably aren’t giving much thought to sending an employee to the bank, the post office, or even a jobsite to check on work being performed in the employee’s own vehicle. Given the litigious environment in many states, a simple fender-bender can lead to a lawsuit. Many times an employee’s personal insurance has limits of liability equal to the statutory minimum and will not be enough to cover the claim; hence the insured’s policy will come into play.
Losses happen — that’s why companies purchase insurance. However companies of any size can be proactive by incorporating simple risk management tools into their company procedures. For example:
- Minimizing the risk from distracted drivers: Studies have found that the majority of accidents today are linked to distracted drivers. Companies should create written procedures regarding the use of cell phones and navigation systems (GPS) while operating a vehicle.
- Personal auto policies: Consider reviewing employees’ personal auto insurance periodically and think about the number of employees driving on the company’s behalf on a regular basis. Ideally, employees should have a limit of liability equal to their employer’s limit of liability. At a minimum, the limit of liability should be adequate to respond to a serious motor vehicle accident with bodily injury and property damage.
- Driver history: Companies should consider reviewing their employee’s Motor Vehicle Record (MVR) at least once a year. Policies regarding the number/type of allowable violations, including serious violations such as substance abuse while driving and reckless driving, are also imperative to managing Hired and Non-Owned risk.
From an underwriting perspective, writing an account for an insured that has the above procedures in-place gives an added level of comfort, knowing that in so many instances the coverage enhancement is provided for very little additional premium. The number of employees who either use their own vehicles, or frequently rent vehicles while traveling, is also an underwriting concern. The more employees, the more exposure; so an underwriter may ask for more information or even a completed application to outline the insured’s risk management procedures.
Underwriters will continue to provide Hired and Non-Owned Auto coverage and insureds will always need the coverage. There is a real exposure, so proactive underwriting, as well as risk management, will add up to more positive results for both insurance carriers and the companies they insure.