Insurance for Commercial Trucks: 14 Questions to Ask

January 29, 2020

Know how insurance for commercial trucks affects your drivers and your businessInsurance for commercial trucks and vehicles is a tricky issue—especially as our work-life boundaries continue to blur. Many companies allow employees to take trucks home at the end of the day and use them regularly in their personal lives. Other companies ask employees to use their own cars during the course of the business day. Self-employed individuals may consider their vehicles to be both business and family-use vehicles. Meanwhile, the insurance company may have very different (and very strict) definitions about who should be driving what.

Let’s look at some common “company car” scenarios and review the questions they raise…

Employee Use of Commercial Trucks & Company Cars

Joe is an arborist who drives his company truck to work. He has permission to drive it to and from jobsites, as well as for personal use on nights and weekends. One night, Joe’s wife needs to move the vehicle from the driveway in order to access her own. She backs into a pedestrian, who then incurs extensive medical bills.

Uh oh, right? Who pays for the medical bills? Joe’s wife’s auto insurance (even though she wasn’t driving her own car)? Joe’s employer’s auto insurance (even though the wife did not have permission to use the vehicle)? Does the claim get denied by both policies?

If you don’t know the answers, keep reading. We’ve pulled together some important questions you should be discussing with your business insurance agent, in order to fully address the many gray areas surrounding employees and insurance for commercial trucks:

Questions for Business Owners with Personal-Use Drivers

  • Are your employees’ family members using your company vehicles after hours or on the weekends? Do you have a written policy regarding this issue?
  • Do your employees maintain their own personal auto policies, even though the primary car or truck they use belongs to your company?
  • If they do have personal auto insurance, do they have a “Use of Other Auto” endorsement on their policy to protect you and your company?
  • If they don’t have personal coverage, does your commercial auto policy include comp, collision, medical bills, and uninsured motorist coverage?
  • Do you need an underlying umbrella policy to go beyond your commercial auto policy?

Employee Use of Personal Autos During Work Hours

Here’s another scenario: Jake works for a local landscaper with a modest fleet. Often Jake will take his own truck to meet with prospective clients and provide quotes, rather than tie up a company utility vehicle for a sales appointment. One workday, Jake is involved in a serious, at-fault collision. His personal auto insurance is set for only the state’s required baseline limits. The injured party is advised to go after you, Jake’s employer, since he was on the job at the time of the accident.

Again, we have some scary questions to consider. Does the injured party really have a case against you, the employer? (Probably. It’s called vicarious liability.) Does Jake have a case against you, for his personal liability exposure? Will your business insurance step in to address the lawsuit(s)?

Questions for Owners Whose Employees Drive Own Vehicles at Work

  • Are your employees using their own vehicles during the course of their workday? This could include meeting with clients, running company errands, even picking up coffees for the team.
  • Do you maintain a “hired and non-owned” auto policy (HNOA) policy or endorsement, to provide excess coverage on top of your employees’ personal policies?
  • If yes, do you regularly monitor your employees’ driving records and vehicle maintenance plans?
  • Do you annually require employees to provide proof of insurance with specified limits?
  • Do you carry an “Employees as Additional Insureds” endorsement? (Without this, your employee may not have liability coverage for the accident in his own car. He or she may be forced to turn around and sue you for the exposure.)

NOTE: the HNOA endorsement mentioned above also applies to rented trucks and trailers. HNOA provides liability coverage (not physical damage) to vehicles your business does not own. Here’s more on insurance when buying or renting equipment.

Insurance for Commercial Trucks when Self-Employed

Jim owns a small construction business. He has a commercial auto insurance policy for his truck, which is his only household vehicle. Assuming he already has the necessary auto insurance, Jim never asks his agent about a personal policy. One day, Jim drives his friend’s car home from a football game. He rear ends another vehicle, causing significant property damage.  

Self-employed individuals sometimes run into trouble when shopping for auto insurance. The logical answer may seem to be a commercial policy for commercial vehicles and a personal policy for any personal household vehicles. But this isn’t always the best strategy, due to overlap and unnecessary premium. It also doesn’t address the coverage gap for people who only own a commercially-insured, business-use vehicle. If you’re self-employed, ask your MA insurance agent the following:

Truck Insurance Questions for Self-Employed Business Owners

  • Do I need commercial auto insurance for my vehicle?
  • If yes, should I insure other household vehicles under the commercial policy?
  • Is my spouse/child covered for use of the business-use vehicle?
  • Do I need a “Drive Other Car” (DOC) endorsement to protect me, as a personal auto policy would, when driving on a personal basis?

Hopefully this post inspires you to revisit your current coverage. We tried to avoid too much nitty-gritty here, but insurance is notoriously rife with technicalities and details, which is why it makes sense to review any questions with an MA business insurance expert. Call us at 508.339.2951 for answers based on your business.

Meanwhile, the main rule of thumb is this: if you OWN it, INSURE it; if you merely USE it, ENDORSE it.