June 3, 2020
Is Your Auto Insurance Delivering During the Pandemic?
Has your business been declared an essential service during the pandemic? If so, you are probably making home deliveries either for the first time or to a greater extent than before.
Almost every state requires commercial auto insurance for businesses with vehicles titled to the company driven by employees.
But what if employees use their own cars? Or your business hires outside drivers or delivery services?
The simple solution here is to add “hired and non-owned” auto coverage to your policy and include “employees as additional insureds.” Your business is protected, and your employee is protected. In the event of an accident involving an employee owned vehicle that’s insured with the employee’s personal auto policy, the employee’s personal auto will pay first, with the business owner policy paying any excess amounts under the claim.
Without hired and non-owned coverage with employees as additional insured, both your business and your employees would not likely be covered when employees are making deliveries in their personal vehicles. The reason is that personal auto policies specifically exclude using the insured vehicle for “livery” — carrying goods or people for a fee.
So, the prudent thing for businesses to do is carry the proper business auto coverage. However, in view of the special situation existing during the pandemic a couple of other solutions have presented themselves — which even if your business is properly covered for automobile liability offer backstop protection.
Insurers Suspend “Livery” Exclusion
Some auto insurance companies, including Allstate, Farmers, Progressive, Liberty Mutual, Travelers and USAA, have agreed to include coverage for drivers with personal auto insurance who deliver, food, medicine and other essential items. When coverage starts and the duration of coverage depends on the company.
Coverage by Insurance Commissioner Mandate
In many states, including California, Colorado, Montana, North Dakota, Washington, Tennessee, Wisconsin and Montana, state insurance commissioners have stepped in to require insurance companies to provide coverage for personal auto insurance policyholders while making deliveries. The “notice” issued on April 10th by California Insurance Commissioner Ricardo Lara is typical: “Insurance companies should not deny a claim under a personal auto policy solely because the driver was providing delivery service on behalf of a California essential business impacted by the COVID-19 pandemic.”
The Notice applies to 16 categories of “essential critical infrastructure workers identified by the U.S. Department of Homeland Security on March 19, including those who deliver food, medication, and other essential goods.”
The California insurance commissioner also “requested insurance companies to extend delivery coverage for motorcycle and bicycle riders, and allow essential businesses to retroactively add drivers to their commercial automobile policies beginning on March 19, 2020.”
These suspensions of the personal auto insurance “livery” exclusion benefit the drivers of course. But employers also benefit, since their liability in the event of an auto claim is substantially reduced with their non-owned and hired coverage stepping in only as excess insurance. With fewer cars on the road, accident rates are also lower, making the suspension of the “livery” exclusion more palatable for insurance companies.
If you have questions about your auto insurance coverage, especially during the pandemic, please contact us.