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Why You Need to See Your Employees' Auto Insurance Declarations Page

Written by mBurse Team Member   |   Jul 24, 2024 7:00:00 AM

Proof of employees' auto insurance will not be enough to protect your business in the event of an accident. It is vital to keep records of each employee's insurance policy declaration pages.

Why you need proof of employees' auto insurance coverage

If your business has employees who drive their own cars for work, check their insurance coverage. The amount of car insurance your employees carry affects your organization's risk of liability for a car accident.

If an uninsured or under-insured motorist causes injury, victims may owe thousands in out-of-pocket medical bills. If that motorist was driving for an employer, the victims' attorneys will seek payment from the employer's insurance company. This claim would be allowable under the legal doctrine of respondeat superior.

It is best practice to maintain a company vehicle policy that requires robust auto insurance coverage. Management should obtain proof of each employee's coverage every six months. Auto insurance rates rose 26% from 2023 to 2024, which could cause some workers to decrease or drop their coverage to save money. 

Proof of coverage from employees' insurance declaration page

Every car insurance policy places limits on how much the insurance company will pay for each accident. State laws dictate the minimum limits motorists can purchase. These minimums are so low that employers should require much higher coverage.

We recommend a 250/500/100 policy. This equates to a $250,000 bodily injury limit per person, $500,000 total bodily injury limit for multiple victims, and $100,000 limit for property damage. This level of coverage doesn't just protect the company. It also protects the employee in the event he or she is struck by an uninsured or under-insured motorist. 

Many organizations obtain proof of auto insurance coverage by having employees submit pictures of their insurance coverage cards. However, those cards do not list liability limits and other information that an employer needs on file.

Instead, obtain copies of each employee's auto insurance declarations page. These declarations are found in the policy document everyone receives when they obtain or renew a car insurance policy.

What is an auto insurance declaration page?

The first few pages of your personal auto insurance policy document summarize types of coverage, liability limits, covered persons, deductible amounts, and coverage dates for each vehicle. The auto insurance policy declarations are summarized on the "dec page" of this document.

You can summarize these declarations on one page. However, the document has other important information depending on your coverages and the number of vehicles.

  • Name and address plus names of insured persons
  • The car insurance company’s contact information
  • Information needed to report a claim
  • Identification cards for the insured and property
  • Types of coverages and limits of liability per coverage
  • Deductibles per coverage
  • Effective policy date and expiration date

Employers should keep a record of this information for each employee. It may seem like overkill, but let's explore why this data matters.

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Why your employees' auto insurance dec pages matter

The insurance declaration pages provide proof that each employee is maintaining the minimum insurance requirements established by the company. If employees provide an insurance card it shows proof of insurance but not proof of the limits of liability. A lot of companies fall short by accepting an insurance card as good enough.

Obtaining the dec pages for each employee will help protect the company from liability for a vehicle accident. The company may still face liability from negligent entrustment, but that's a separate issue for a separate post.

Verifying auto insurance coverage

Requiring employees to maintain a certain level of auto insurance reduces company risk. But if management does not enforce the rules for minimum coverage, then the company remains exposed. I an employee is involved in an accident, the employer may still face liability. So what's the best way to enforce minimum car insurance coverage?

Insurance renewals typically occur every six months. Hence your company should require employees to submit their insurance declaration pages twice a year. If you pay a car allowance or reimbursement, you can suspend payments if an updated dec page has not been submitted in time. This will ensure compliance with the policy.

Personal vs. business auto insurance for your employees

Not all business uses of a vehicle are covered by a personal car insurance policy. Employees should inform their insurance company that their personal vehicle is used for business purposes. This will ensure coverage should an accident occur during work hours.

It is also important to make sure your company's business insurance policy includes coverage for non-owned vehicles. This step protects the organization if an employee decreases insurance coverage and causes an accident during work hours.

Auto insurance policy and company car allowances

If your company requires employees to increase their insurance coverage, you should increase their auto reimbursement or car allowance to offset any premium increase. If the employee is going from a 100/300/50 policy to a 250/500/100 policy, the increase will not be large. But if the employee is increasing from a state minimum, say 25/50/25, then the premium increase will be high.

For further guidance on auto accidents, driver safety, and other risk factors, read our ultimate guide to mobile employee risk. Or schedule a risk audit to get a sense of how much risk your current policy involves.

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