How mobile employees car insurance dictates your risk

Written by mBurse Team Member Jul 31, 2017 9:05:00 AM

If your company has employees who drive as part of their job, your company faces immense risk. According to OSHA, a motor vehicle crash occurs every 5 seconds, a crash-related injury occurs every 10 seconds, and a motor vehicle fatality occurs every 12 minutes. Many of these accidents occur during work-related activities.

With more and more Americans driving personal vehicles for work purposes, it is vital that employers set clear parameters for employees’ auto insurance. Many organizations only require employees to carry the minimum insurance coverage mandated by their state. Others set no requirements for employees that drive personal vehicles for business. In both cases, failure to establish clear guidelines leaves both employer and employee exposed to financial risk.

What You Need to Know about State Minimums for Auto Insurance 

State minimums for auto insurance typically fall short of what is realistic for modern day accident costs. If a driver causes an accident while on the job, and the expense exceeds the driver’s insurance coverage, the company employing the driver will be responsible for the difference in costs. An organization that thinks, “If it’s good enough for the state, it’s good enough for us,” will experience a rude awakening in the event of an accident.


Auto insurance coverage is typically summarized in terms of three specific limits to the amount the insurance company will pay in the event of an accident: 1. bodily injury for one person involved in the accident, 2. bodily injury for all persons per accident, and 3. property damage.


For example, the state of Ohio requires that a driver’s insurance pay up to $12,500 for medical costs for each individual injured, or up to $25,000 per accident, and up to $7,500 for property damage. This requirement would be expressed as 12.5/25/7.5. The Insurance Information Institute, however, reports that in 2015 the average individual claim for bodily injury was $17,024. And that's just average. Injury claims of $50,000 or more are not uncommon at all.


Because not all accidents involve bodily injuries the property damage portion of car insurance should not be neglected. Low impact accidents have the potential to cause substantial property damage exceeding a states property damage easily. Take the state of California, it only requires that a driver's insurance pays up to $5,000 for property damage. With the high costs of replacing and repairing property the minimum can be met very quickly and potentially involve your organization.

To keep your company free from having to pay the difference between an underinsured employee's coverage and the actual cost of an accident, you should require employees to carry business insurance for their personal vehicle, which sets coverage at 100/300/50.


No State Minimum for Auto Insurance Coverage Is Sufficient

Look at the list below and consider the risk of allowing employees to stick with the state minimum:

10/20/10: FL, LA, OK
12.5/25/7.5: OH
15/30/5: CA, DE, NJ, PA
15/30/10: AZ, GA, NV
20/40/5: MA
20/40/15: IL, IA, MD, TX
20/50/ 10: ID
25/50/15: AR, CO
25/50/20: VA, WY
25/65/15: UT
30/60/10: MN
30/60/25: NC
50/100/25: AK, ME

Don't get caught with state minimum auto insurance, it is bad for business. Even if your organization is protected by a policy that requires business insurance for a personal vehicle, you could still be at risk. The importance of annual Motor Vehicle Reports (MVR) cant be neglected. 


Take the risk quiz to see how exposed your organization is to a potential car accident.

Your companies risk is based on your employees that drive.

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