When you let a friend borrow your personal truck to run to the home improvement store to pick up some materials, are they covered if they get into an accident?

If you hire a new employee at your business and allow them to drive your company owned auto to run to the bank to make a deposit, but fail to tell the insurance carrier about the new hire, is coverage afforded if they are involved in a fender bender?

The topic of “permissible use” is one that comes up frequently in the insurance business and can lead to some confusion.  By definition, both commercial and personal auto insurance policies are written to cover “permissible use”.  That is anytime you allow someone to knowingly use your owned automobile; any resulting accident would be covered by the insurance policy in place at that time.  A common misnomer is that insurance coverage follows the driver, rather than the vehicle itself.

However, both personal and commercial insurance policies are written to follow the vehicle’s being insured, regardless of who the operator is.

That being said, it is very important that the insurance carrier is aware of who is going to be primarily operating a vehicle during the course of the insurance policy.  This serves a few purposes.  In being provided an up to date driver list, the carrier can properly rate and price the insurance coverage on that vehicle in question.  If a particular operator listed has a less than perfect driving record, there is a chance the insurance carrier may issue a ‘driver exclusion’ that would NOT allow coverage to be afforded should that person be involved in an accident.

From a business owner standpoint, it’s always recommended that you ask new hires to provide you with an up to date report of their driving history from the Department of Motor Vehicles.  If someone is hired and part of their job includes driving a company issued vehicle, if they have a poor past driving history, there’s a good chance you wouldn’t want them on the road.

According to actuaries and statistical studies, those folks with a poor prior history have a tendency to get into future accidents.  If that comes to fruition it could lead to higher rates on your commercial auto insurance policy.