Commercial Auto Insurance and Mobile Device Guidelines (Spring 2011)

Commercial auto insurance differs greatly from personal auto insurance.  The type of coverage you need depends on a variety of factors.  Here are a few tips to help determine if you need commercial auto insurance:

• Whose name is the vehicle registered under?  If it is registered in the name of the business, you need commercial auto insurance. 

• How is the vehicle used?  If you or your employees use the vehicle for business purposes, then you need a commercial policy. Even personal vehicles may also need commercial auto coverage if they are being frequently used for business purposes. Although your employees’ vehicles are covered by their own personal insurance policies, this coverage will take effect if an employee is involved in an automobile accident with damages that exceed the limits of their own private policy.

If you have employees who drive as part of their job, you should definitely have a written policy regarding cell phone use while driving to reduce your risks and liability. Should one of your employees be involved in an automobile accident, you may incur a workers compensation claim, expenses of hiring and training a replacement if the employee is unable to return to work, and related out-of-pocket expenses for repairing or replacing the vehicle and its contents.

Another substantial economic risk arises if an employee injures someone else in an accident. If an employee caused the accident due to the distraction of a cell phone, you will likely be liable for any injuries or damages caused by the accident. Additionally, if you do not have any policies or guidelines regulating cell phone use while driving, your liability could be even greater.

Understanding applicable state and federal laws pertaining to cell phone use while driving is critical when developing guidelines and a written policy. Here are some sample statements you may choose to include:

• Cell phones are not to be used while driving a moving vehicle or operating moving machinery, as such distractions can cause accidents and injuries.

• Employees are required to comply with all state and local laws regarding the use of cell phones while driving. If cell phone use is necessary while driving, all employees must use a hands-free device.

• All text messaging, including typing or reading text messages, while operating any vehicle (employer-owned, rented, or personal) when conducting company business is prohibited.

• Any violations of this policy will subject employees to disciplinary action, up to and including termination of employment.

The safest and most conservative policy would be to prohibit any use of a cell phone while driving. If you feel your employees need to have access to a phone while driving, you should implement policies that still keep usage with certain parameters (e.g. hands-free device). Doing so will lessen the potential liability for both your employees and your company.