Q: If an office employee occasionally drives a company vehicle to deliver mail or documents, do they need to be listed as a driver on the business auto policy? Given that most auto policies allow permitted drivers, how do you decide which employees need to be explicitly listed?
Response 1: Listing drivers on a policy is more an underwriting and rating issue than a coverage issue. Knowing who will be driving enables the underwriter to obtain and review each individual driver’s motor vehicle records and loss histories. That process also has a positive effect on the agency's loss ratio. Being as forthcoming as possible about potential drivers is always the best course of action.
Response 2: The policy allows anyone to drive with the permission of the named insured. The insurer wants information on anyone who drives, or may drive, one of the company’s autos on any regular basis. The office employee who only drives once in a while may have a terrible driving record. It only takes a single crash to cause a large loss.
Response 3: Everyone who might drive a vehicle on behalf of the business should be listed.
Response 4: The carrier has a right to know who is driving the vehicles, even occasional operators.
Response 5: Provide the information that the application and the underwriter require. Typically, auto policies cover permitted users, whether they’re scheduled or not. That said, some policies place restrictions on drivers, and some insurers will deny coverage for unlisted drivers on the basis that they should have been reported.
Response 6: Check the carrier’s underwriting manual, and be wary of not listing “occasional drivers.” An insured might tell you they only drive once in a while, but in reality, it’s every day. They might have multiple violations and accidents on their record and the insured simply doesn’t want to pay the additional premium.
Response 7: Insurance companies hate claims involving undeclared drivers. When this occurs, they feel they have been deprived of the opportunity to properly underwrite and price the risk, especially if an undeclared driver has a poor driving record. If multiple undeclared driver events occur, some underwriters may question the strength of the insured’s management and operations.
Keep in mind: Most commercial auto policies include non-owned auto liability. Don’t be surprised if companies also want to list the driving information for employees who only drive their personal autos for business reasons.
As far as which employees to list, it depends upon the account. For example, due to the nature of many contractors’ operations and how they use their autos, it might make sense to list all employees on the driver schedule. On the other hand, it might be reasonable to take the opposite approach for a retail operation.
In some cases, such as an insurance agency that employs 10 producers who operate their personally owned cars for agency business, it may be wise to list all those producers on the driver schedule when non-owned auto liability coverage is in place.
Response 8: You have a duty to the insurance company to follow their underwriting rules. Disclose the drivers the carrier wants disclosed. Begin by filling out the application, and if you know of drivers who aren't disclosed by the application, ask the carrier for instruction. Bending the truth with a carrier is a very risky business. Your client may end up with coverage, but you might end up with an errors & omissions lawsuit.
These questions were originally submitted by agents through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.