By: Jeff Saams
Hired and Non-Owned Auto Liability may be one of the largest risk exposures many business owners do not realize. Common misconception exists that Commercial Auto coverage is not necessary if a HOA or Property Management company does not own any vehicles. In reality, most companies use autos owned by their employees, agents and members of the household in connection with their business and could be sued by a third party in an event of an accident.
Everyday situations involve using non-owned vehicles for HOA purposes, such as asking an employee to pick up breakfast for a meeting, sending a sales representative to visit a client, or having a friend mail a package on her way to the post office. Unfortunately, accidents are not uncommon. According to the United States Department of Transportation, all drivers have a near motor vehicle accident once or twice per month. Most importantly, each driver will be in a collision approximately every six years.
Personal Auto Insurance Does Not Protect the HOA or the Property Manager
Personal auto insurance is primary, but it does not protect an HOA or Property Manager if their community is sued. When an employee causes an accident, the injured person shall more than likely look to the HOA or Property Manager to pay damages. Reflecting on the large number of Motor Vehicle Accident law suits, most business contracts now specify Commercial Auto Liability limits as a part of their requirements.
Unless Property Management employees use public transportation for all business needs, hired and non-owned insurance is a necessary part of any commercial insurance program. Ordinarily this coverage only provides liability protection for rental situations and errands, but sometimes physical damage insurance is available. A company does not have to own any vehicles to obtain hired and non-owned coverage, and it could simply be added to the general liability policy.
Not sure if your association has the correct auto coverage? Request a Complimentary Consultation of your insurance and risk management program with a DDM Advisor today.