Why Your Employees' Car Insurance Matters

Written by mBurse Team Member Feb 4, 2019 10:08:00 AM

One out of eight U.S. motorists is uninsured. These drivers pose a threat not only to other drivers but also to their employers, making employee car insurance a serious matter that many companies ignore.

Many organizations are completely unaware of how their employees’ personal car insurance exposes the organization to significant risks. Employees that are either underinsured or uninsured pose a serious risk to their employers because, in the event of a work-related accident, the company itself could be held liable. This is an Achilles heel that should be addressed in 2019.

Mobile employees help drive business. A mobile employee is anyone who needs a car to carry out his or her job responsibilities. While these employees may perform valuable services to the company, they also bring a specific set of risks. In order to control costs and protect the company, your organization should have a set of risk management policies tailored to the role mobile employees play.

First and foremost among those policies should be a requirement that all mobile employees carry a certain minimum amount of car insurance. If an employee that is uninsured finds themselves in an at-fault work-related vehicle accident, your company will be left to pay for the resulting damage and heath costs. It’s time to make employee car insurance a priority for your company.

Employee accidents

Prevalence of Uninsured Motorists
The likelihood of an uninsured motorist working for your company may be higher than you think. One out of eight U. S. motorists lack car insurance, but in some states the number is much higher.

The Insurance Research Council (IRC) generates reports studying insurance and motorists. The IRC has compiled a list of the top 10 states with uninsured motorists:

  1. Oklahoma: 25.9%
  2. Florida: 23.8%
  3. Mississippi: 22.9%
  4. New Mexico: 21.6%
  5. Michigan: 21.0%
  6. Tennessee: 20.1%
  7. Alabama: 19.6%
  8. Rhode Island: 17.0%
  9. Colorado: 16.2%
  10. Washington: 16.1%

If your company does not currently require mobile employees to carry auto insurance, it’s not unlikely that—given those numbers—you’ve got uninsured employees.

But even if your company does require a minimum auto insurance coverage, how do you know all employees are complying? Does someone routinely conduct employee car insurance verifications as part of their job?

Risk calculatorConsequences of Uninsured Motorists 
If you’re not sure what your policies are or whether they’re being properly enforced, you need to find out—ASAP. Consider the consequences of allowing employees to drive uninsured.

When an employee elects to cut personal costs by forgoing or reducing auto insurance coverage, it is a huge gamble that can have a ripple effect. In the event of a work-related accident, your company will end up paying because the at-fault driver is a representative of the company.

On top of this, there is a good chance their driver’s license and registration will be suspended. Getting them reinstated will require proof of insurance. There is a very good chance they will not be able to drive for a while. If part of their job relies on using their personal vehicle for business they will have problems being a productive driver.

Reducing Uninsured Motorists
There are several states that have taken steps to reduce the number of uninsured motorists. In Georgia, for instance, the state will suspend a motorist’s driver’s license if their car insurance lapses or expires. How does the state find out? The insurance carriers themselves electronically notify the Georgia Department of Motor Vehicles (DMV) in the event of an interruption of insurance coverage.

But don’t leave it up to the state to address the uninsured. Your organization needs a policy to mandate employees insurance if they travel for business. If you neglect to write a policy to require car insurance, you are exposing your company to unnecessary risk. If you rely on the state minimum car insurance, which is often too low to cover serious accidents, you are exposing your company to risk. If you have a policy but neglect to verify employee car insurance, you are exposing your company to risk—especially in those states with high numbers of uninsured motorists.

What are you doing to curtail these issues? A good start is our complete guide to mobile employee risk. If you are not working on verifying car insurance or making changes to your car reimbursement or auto allowance policy, you are at risk and exposed. If you are exploring possible options like policy design or insurance verification take a look at our professional services.

And remember, if you require your employees to carry additional car insurance above the state minimum (and you should!), don’t forget that you should reimburse your employees for the additional expense. Several states have labor laws that require you to reimburse that additional amount.

What you need to know about mobile employee risk

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