Managing Your Risk
Driver beware: Auto insurance isn't automatic

Don't assume your county auto insurance policy includes individual coverage for employees driving county-owned vehicles off the clock

By Michael Kelly
NCACC Risk Management

Does your county automobile use policy let employees take county-owned vehicles home at the end of the workday? As the risk manager, how do you access and address the liability exposure of having employees driving county vehicles both on and off the job? What advice can you give your staff that helps put them in the best position should an accident occur that may not qualify as being "within the scope" of their regular employment duties?

Most county commercial auto insurance policies will provide coverage for the driver on an individual basis, with the key being "while used within the scope of their work or duties." The issue addressed here is what the employee can expect if the accident in question falls outside of their assigned duties and what, if anything, they can do to protect themselves in this potentially gray area.

It is important to note that the North Carolina standard personal automobile policy excludes liability and medical pay coverage arising out of the operation or use of a vehicle not owned by you but furnished to you on a regular basis (such as a county-owned vehicle). This means a county vehicle is not covered as an insured auto on an unendorsed North Carolina personal auto policy. Unfortunately, this also means should the employee be named in a lawsuit individually, and they are not on county business, it can get sticky, as it is then possible to potentially not have any coverage available to that individual.

The solution is to have the personal lines insurance carrier endorse or amend the employee's personal family auto policy to add something called "Extended Non-Owned Auto Coverage" (Endorsement Form NC0306 Ed.7/80). This is an extremely important and relatively inexpensive personal lines endorsement that changes policy language so that vehicles not owned by you but furnished to you for regular use are covered for liability and medical payment coverage on an excess basis.

This provides a stop-gap measure that protects the employee individually regardless of the circumstances of an accident in a county-owned vehicle. It allows the employee to know that, on the job or not, there is available liability and medical pay coverage at a dollar limit at least as high as they carry on their own personal auto policy.

Normally public entity automobile use policy dictates no non-employee passengers are allowed to ride, with little or no allowance included for personal mileage. Additionally, the traditional risk manager's goal is to have after-hours driving – and thereby exposure – kept to a minimum. While this is certainly the suggested best practice, reality is such that at times it may be impossible for staff to follow. For an additional relatively small cost of $90 to $100 per year, it is well worth the investment and individual peace of mind to have an employee routinely driving a county vehicle to be made aware of this available personal auto policy endorsement and give them the option of coverage.

Other suggested risk assessment steps are to examine your county's commercial automobile insurance policy and confirm that employees are in fact insured on an individual basis. If you are protected through the NCACC Liability & Property Pool, employees are automatically included. If you are insured via a "for profit" standard insurance company, employees may or may not automatically be covered, so take the time to review and, if handled through an agent or broker, ask them for clarification in writing.

A lack of coverage could result in a huge problem for one of your staff. Self insurance and one's willingness to take on and assume risk is fine as long as it was identified initially before the loss, otherwise you have no choice – and it can be a bitter pill to swallow.

Michael Kelly serves as Property and Casualty Program Specialist for the NCACC's Risk Management Pools. He writes a regular column on risk management for CountyLines.