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Non-owned auto exposure

Do your employees use their own vehicles? Beware the risks.

November 1, 2013  By CNA Financial Corporation

Many companies know that there are risks associated with managing a fleet of vehicles for company use. But a business owner may also be liable for accidents that occur in vehicles not owned by the company. Do any of your employees use his or her personal vehicle to run errands for the company? Do your salespeople use their own vehicles for company business? Are any employees reimbursed for driving his or her own vehicle to pick up supplies or parts?

Anytime someone uses a personal vehicle on behalf of a company, the company has a non-owned auto exposure. If an employee causes an accident in his or her own vehicle, the liability insurance policy on the vehicle is the first line for liability coverage. After the limits of liability on the employee’s personal automobile are exhausted, the injured party may look to the company to pay damages. Your company could be put in this situation under the theories of negligence or vicarious liability. There are steps you can take to protect your company from non-owned automobile exposure.

If possible, implement a requirement that employees must use company vehicles  for business-related tasks. Allow only designated employees to conduct business with personal vehicles. Review your employees’ motor vehicle record (MVR) before they start driving. Follow up with annual MVR reviews. Require that each employee driving his or her own personal vehicle for business must provide proof of insurance.

For employees who regularly drive on company business, require the company be named as an additional insured on the employee’s personal auto policy.

Regularly inspect the vehicle to ensure it is properly maintained and safe.


Investigate all accidents and provide training to prevent future accidents.

Keep written records of everything you do to control the non-owned auto exposure.

Here are some suggested criteria to help determine what to look for when reviewing your employees’ motor vehicle records. The following violations are classified as guidelines from CNA only. Use discretion when checking your employees’ motor vehicle records.

Class A violations

  • DUI (alcohol or drugs)
  • Reckless or careless driving
  • Hit and run
  • Vehicular assault
  • Racing/speed contest
  • Driving on suspended or revoked license

Class B violations

  • Moving violations, including speeding
  • improper lane change
  • failure to yield/obey traffic sign or signal
  • suspended license related to moving violations

Consider implementing guidelines, such as prohibiting anywho who has received a class A violation within the last five years from driving for your company. drive for your company if they have received a class A violation within the past five years. Or, perhaps drivers with two type B violations or one at-fault accident in the past three years should be put on warning.

Familiarize yourself with these tips on how to manage non-owned automobile exposure to avoid being held liable for accidents that occur in vehicles your company doesn’t own.

The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice.

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