When employees use their personal vehicles for work purposes, things can grow complicated when it comes to insurance and accidents. If an employee has a car accident while working, who is responsible for the damages—the employee or the employer? 

Personal vs Commercial Auto Insurance 

Most personal auto insurance policies are not designed to cover commercial activities or commercial vehicles. Vehicles owned by a business must be covered under commercial auto insurance. While personal auto insurance may cover a limited amount of work activities, such as commuting to and from work, simply trusting a personal auto insurance policy for commercial vehicles may leave gaps in coverage. 

For example, say your employees frequently use their own personal vehicles to transport equipment between job sites. If an accident occurs, their personal auto insurance may not be enough to cover damages and likely won’t cover any of the equipment inside the vehicle. In turn, this means that liability could then fall back on the business for damages and injuries. 

At a glance, personal auto insurance and commercial auto insurance policies provide much of the same types of coverage. Commercial auto insurance policies may offer higher limits and require more liability for certain vehicles, however. Full coverage for both policies may include: 

• Comprehensive Coverage: Comprehensive coverage covers physical damage to the vehicle caused by incidents aside from collision, such as fire, wind, hail, lightning, theft and vandalism. 
• Collision Coverage: Collision coverage covers physical damage to the vehicle caused by a collision with another vehicle or object. 
• Liability: Liability covers bodily injury and property damage the driver may cause someone else while operating the insured vehicle.
• Medical Payments: This insurance, also available as personal injury protection (PIP) in some states, covers the medical bills of the driver and their passengers after an accident.
• Uninsured/Underinsured Motorist: This insurance covers damages and injuries in an accident involving another driver who is not carrying an appropriate amount of insurance to cover the damages. 

What Commercial Auto Insurance Covers Employee Vehicles? 

Commercial auto insurance is primarily designed to cover commercial vehicles owned by a business, such as trucks, vans and company vehicles. There is a way to cover employee vehicles under the business’ auto insurance policy, however. 

Hired and Non-Owned Auto covers vehicles used or borrowed by a business. This includes rented vehicles and employee vehicles and provides extra liability in case of an accident. If an employee causes an accident that results in severe injuries, for example, Hired and Non-Owned Auto insurance can help cover the damages and protect the business in case the lawsuit falls back on its shoulders.