Today’s story will be of special interest to:
1. Business owners — or anyone considering going out, where:
2. Their own car or an employee’s vehicle might be used for business purposes.
With this in mind, how do you answer this true/false question?
“As long as our personal vehicles are only used occasionally for business-related matters — such as picking up clients from the airport or making deliveries of things like contracts or other documents, there is no need to obtain Business Auto insurance. Our personal auto policies will cover us.”
Just run that question by Southern California personal injury attorney, author and lecturer Shawn Steel and you’ll understand why business auto insurance, “can be the single most valuable asset you can own if things go horribly wrong,” he observes.
For a moment, it is important to point out that Steel, who is a friend of this column, isn’t the run of the mill “ambulance chasing” lawyer, which California breeds like cattle, with “I Win” and “We’ll Fight For You” ads plastered on busses, billboards, TV, radio and the internet. No, he is a credit to the legal profession, writing and lecturing on aspects of personal injury practice which truly help accident victims, and assures that health care professionals get paid by the many lawyers who intentionally stiff these people.
Red flag warning
It is critical that employers understand the risks they are exposed to when employees use their own vehicles for company purposes. This starts with being aware of the typical limits of liability with personal auto insurance. Most personal insurance liability policies are small, with lots of people only having their state’s minimum limit.
“In a bad accident with fractures or other serious injuries requiring surgery and hospitalization,” Steel points out, “damages could be much greater than the limits of most personal insurance policies. Add to this the real possibility that an employee’s policy could exclude accidents which occur while the vehicle is being used for the benefit of the employer. If that happens, both the employee and employer are likely going to be sued, unless the employer has adequate limits of business auto coverage.”
‘Course and Scope’
Employers need to understand an important legal concept called Course and Scope of Employment, the following example provided by Steel:
“Bob drives his own car to and from work and one day causes an accident. His own personal auto insurance will cover him. But anytime the route is deviated, at the request of his employer — let’s say to pick up lunch for the office staff — then the primary carrier should be the business insurance, not his personal policy.”
The incredible value of having business auto coverage was demonstrated in a tragic accident he uses in his lectures for lawyers. If anything proves the reason to obtain adequate limits of coverage, this one does:
“The client was working in a freeway trash pick-up detail due to a DUI offence, wearing a bright orange outfit. While doing his job, putting trash in the truck, a speeding car came over a hill and crushed both of his legs, requiring amputation below his knees. The 17-year-old boy driving the car lived with his parents on a ranch. It was the young man’s car, in his name and had state minimum liability coverage of $15,000 per person.
“An investigation revealed that on this day — a Sunday morning — he was delivering a package of candy for one of his mother’s customers, from her store.
“They had business insurance including business auto in a million dollar limit, which the insurance company promptly paid. Lacking that, the ranch and business would have been sued. In addition, the ranch also had insurance — and a million dollar umbrella policy covered everyone in the family. Mom’s store also had a million dollars of coverage.
“This was an example of the family’s independent insurance agent truly acting in their best interest, as buying those limits of coverage is one of the best bargains available in the world of insurance. Running a business creates risk, and these risks are amplified when family members or employees use their own vehicles on the job. Companies that are bankrupted — families losing homes to satisfy large judgments — these things happen and seldom make it to the front pages of our newspapers.”
Steel concluded our interview with this cautionary note:
“If your agent tells you not to buy Medical Payments or Uninsured/Underinsured coverage, get a new agent! These are absolutely critical to have at substantial limits, no exceptions.”
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.