Car Insurance for Employees

Commercial car insurance for employees has average rates of $304.83/mo in the US. Comparison shopping for multiple quotes online may save you up to 20%.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2020

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Here's what you need to know...

  • Business auto plans may only cover specific drivers
  • Employers can be liability for the employee’s personal use of a vehicle
  • Non-owned policies can safeguard your business against some liabilities

Commercial auto insurance is different from traditional plans you may have for your cars.

Rather than allowing your friends and family to drive the car with permission, most commercial plans will list specific drivers who are authorized by the company to drive.

Before you ask an employee to run an errand in the company vehicle or even his own car, here’s what you should know about the potential liability and your insurance.

If you’d like to start comparing auto insurance rates beforehand, try our FREE online quote tool. Enter your ZIP code above!

Commercial Car Insurance is Expensive

It’s a fact that commercial auto insurance is more expensive than personal plans. You can expect to pay two to three times more for similar coverage.

The raise in price is because the risk level goes up for company cars.

One concern is that there may be several individuals who are driving for the company. Additionally, there are more liability issues when you have employees behind the wheel.

Another concern for insurance companies is the risk that an employee may be injured in an accident and will file a claim for coverage.

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Coverage Options Vary From One Company to Another

You’ll also find that companies have different requirements based on your business type and needs.

You can expect your company to ask detailed questions regarding:

  • Who is driving the cars
  • Whether the vehicles are rented, owned, or leased
  • How the vehicles are used in the business
  • If goods, employees, or customers are ever transported in the vehicles

Depending on the type of business you’re engaged in, one company may be unable to cover you. However, you can shop around for coverage with other providers.

Likewise, if one company wants high rates that won’t fit in your budget, you can check with other companies for more appropriate terms.

When Commercial Car Insurance Coverage is Required

Vehicles that are owned by a corporation must carry commercial auto insurance. However, you may not realize that your personal vehicle will also need to have a particular plan if it’s primary use is commercial.

Additionally, you’ll also need commercial coverage on any vehicle that has commercial plates.

Before you decide what type of coverage you need, consider the following:

  • If the car is registered to your company or yourself
  • If employees every drive the vehicle
  • If the primary use is for business or personal errands

Adding an Employee to Your Car Insurance

As your business grows, you may need to have employees handle errands for you.

One option is to simply add the employee to your commercial plan.

To do so, call the company to discuss the situation and provide them with more information about the employee. They’ll collect the data and inform you of any rate changes.

If there will be a substantial increase, then you can shop around to see about switching providers at renewal time.

Another option is to extend your business auto coverage to cars that are owned by your employees.

Have your employee lease their personal car to the business, and then you would have the endorsement added to your policy.

Although, there are several potential pitfalls you should be aware of:

  • The employee’s personal auto coverage may actually cover the business use, so this process would not be necessary
  • Using the business plan may actually be a type of fraud, depending on the situation
  • The lease agreement must be a formal document that is legally binding
  • The business policy will cover the vehicle 24 hours a day, including when it is in engaged in personal use by the employee
  • You will not have any control over how the car is used outside of work, but you will still be carrying the coverage

In the end, you may be increasing your own potential liability by insuring an employee-owned vehicle. The liabilities can be better controlled by either adding an employee to the existing business plans and vehicles or just asking the employee to use their own car for occasional errands.

Potential Liability Associated with Business Use of Employees Personal Vehicle

Liability issues become murky when employers mix business with employee-owned personal vehicles. In some cases, an employer may wind up being found liable when there’s an accident involving the vehicle in question, even if the accident occurs while the employee is on personal time.

For example, an employee was required to drive her personal car to and from work so that she could transport employees around to other destination. When the employee caused an accident on the way home, the employer was found liable because the company benefited from the business use of the personal car.

You can also be held liable any time an employee is running an errand on company business.

Running an errand on company time would include asking an employee to make bank deposits or pick up lunch for the group. If their own insurance does not cover the full incident, then your company could wind up paying the difference.

The solution is to shop around for a non-owned auto insurance policy that will protect your business for these types of errands.

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Shop Around for the Best Car Insurance Coverage

It can be hard to find the right commercial coverage, but a comparison site makes it easier. You can be directed to companies that offer the plans you need, including commercial coverage and plans for non-owners.

Shop around to find the most attractive rates so that you can keep this fixed expense down for your business.

Start comparison shopping today for the best auto insurance rates! Enter your ZIP code below!


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