In this episode of “Bella In Your Business”, we are joined once again by David Pearsall, Vice President at Business Insurers of the Carolinas, which specializes in commercial insurance, including businesses providing pet services. David joins Bella for the second of many episodes dealing with insurance for those in the pet sitting industry. This episode focuses on Non-owned Car Insurance Coverage.
To start with, Bella asks what happens if she has an employee driving his/her own vehicle while doing pet sits and they get into an accident. David starts off by defining Non-Owned Auto Liability insurance. He says it’s usually a specialty endorsement to either a Business Owner’s Policy (BOP) or a Commercial Auto Insurance Policy. Non-Owned Auto Liability policies cover any vehicle not owned by the business owner, but rather owned by the owner’s employees or other individuals who are using it in the course of business.
In Bella’s hypothetical situation, David points out that if the employee is sued as a result of the accident, the employee’s liability insurance will be the one initially used to provide for the plaintiff if the employee is found liable. But, if it is discovered that the employee was on business at the time of the accident, the plaintiff can also sue the business. This is where Non-Owned Auto Liability insurance can help.
David points out that these policies generally only cover employees and not independent contractors. He stresses that this is “excess” insurance and that in almost all cases the employee’s liability is considered “primary”. So this policy will not keep employees from being found liable or their insurance responsible. These would pay in excess of the employee’s insurance, which often has fairly low limits (often around $100,000).
Bella asks if there are different options and generally what are the limits they pay. David says there a couple of options but generally the limit is around $1 million.
According to David there are two ways to purchase Non-Owned Auto Liability insurance. The first, and preferred way, is to buy it through a Commercial Auto Policy. He points out that if you as a business owner have a vehicle in which you have stickers or logos or the name of your business on it, and your business is your primary source of income, you really should have a commercial auto policy anyway as personal auto policies aren’t really designed for that. And, you cannot add a Non-Owned Auto Liability endorsement to your personal liability insurance.
So Bella asks if a pet sitter has a magnet on their car have they just opened up their business to liability. David says that they have even without the magnet or sticker. If they are using the auto routinely for business, they really should have a commercial auto policy.
The second way to get a Non-Owned Auto Liability endorsement is through a Business Owner’s Policy (BOP). It is often available through one of the many options offered when you purchase a BOP.
Bella asks if this is similar to an umbrella policy. David says this is different. An umbrella policy goes over all of your other policies and gives excess coverage. Umbrellas are really for large claims and again, in addition to other existing policies. They then spend some time discussing the confusion around umbrella policies including how they don’t really cover special events either.
Bella then hits David with listener questions.The first question is from a listener who asks that if she wants Non-Owned Auto Liability insurance from David’s company, why does she have to change her personal liability insurance to his company as well.
David’s response is that they offer Association liability policies. But, that they also offer Business Owner’s Policies. So, she would not have to switch her personal liability insurance to get Non-Owned Auto Liability insurance if she did so through a BOP. According to David, it all depends on what you are looking to cover in your business.
Bella asks a second listener question. The listener says she was told she should have Professional Liability insurance to cover things her General Liability will not. She found that Professional Liability from another company includes Non-Owned Auto Liability insurance, so why would she have to get Commercial Auto insurance from BIC (David’s company) when she can purchase that policy separately through others.
David explains that in his experience he has seen a great number of claims that ultimately are not covered under a Business Owner’s Policy, particularly if you are using independent contractors. Whereas the Association’s policy has it endorsed to automatically pick up independent contractors. It also covers many liability exposures that typical Professional Liability policies will not.
David explains that you cannot add Non-Owned Auto Liability insurance directly to an Association policy. So some clients buy both the Association policy and a Business Owner’s Policy to which they can add the Non-Owned Auto Liability insurance. Other’s buy the Association policy and a separate Commercial Auto policy to which to add the Non-Owned Auto Liability insurance.
David maintains that a Business Owner’s Policy may be a good fit for some and that there are a host of other policies you may need to think about like Employment Practices Liability insurance and Cyber Liability. So you need to talk to an agent and make sure you uncover what all your exposures are to find the best fit.
The third listener question asked whether discounts are offered on these specialty policies through the PSI Association. David says they are unable to offer discounts on these because many are offered by third-party insurance companies who do not offer discounts to the association.
In summary, Bella asserts, and David agrees, that if you have employees driving personal vehicles in the course of business, you need Non-Owned Auto Liability insurance. But, as always, have a long talk with David, one of his staff, or your own insurance agent to find the best policies for your exposures.
If you would like to contact David, he can be reached at 1-800-962-4611, ext. 214 or at an email address which is mentioned in the podcast.