Mistitled: Covering Personal Cars on the Business Auto Policy

It’s a common occurrence: a business owner places his/her personal vehicles on the company’s Business Auto policy. As long as the owner’s broker secures Symbol 1 liability coverage, the company and its employees have liability coverage for any car they drive. Right?

Not quite. The biggest issue facing businesses and family members in this scenario is the title of the vehicle. The individual/entity who owns the car is not the same as the individual/entity that insures the car. One of the main cornerstones of insurance is financial interest in an asset. From the insurance company’s point of view, a business does not have a financial interest in another’s personal vehicle – even if that individual is the owner. If an insurance company provided coverage for the owner and his family, it would be required to provide coverage for all of the firm’s employees and their family members.

While owners and their family members are insureds under the Business Auto policy for the company-owned vehicles, they are not insureds for their personally-owned vehicles because the Business Auto policy excludes coverage for autos owned by an employee or a member of the employee’s household. Moreover, the owners and their family members are not insureds for autos that they personally rent or borrow.

In order to avoid future headaches, owners should purchase vehicles through their business, if the vehicles are intended for personal use. Title becomes a non-factor because the owner of the vehicle would be the same entity that insures it.

Author: Michael McGuire, ARM

Account Executive

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