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Insurance - Non-Owned Vehicle Risk Management

image Mark Gaskamp, Sr., Vice President, Marsh Wortham, Austin, TX

AUSTIN - Everybody’s got one, some larger than others, some are not even owned, but they still create a risk for the organization. Construction operations have so many worker safety (OSHA) and liability issues (construction defect, mold, silica, etc… ) they often neglect addressing one of the greatest risks to the organization, vehicles and safe driving. In fact, motor vehicle accidents are the largest source of workplace fatalities in the work place. This includes not only the owned trucks and other vehicles owned by the company, but also the use of personal vehicles on company business.

    A serious auto accident involving an employee driving on company business is one of the few exposures that can result in a first party, property damage claim, second party workers compensation claim, and a third party liability claim. Each can result in significant financial loss depending on the nature of the accident. It is such a critical workplace safety issue OSHA, in cooperation with the National Highway Traffic Safety Association, has dedicated resources to develop a guide & resources to help show the importance of fleet safety. https://www.osha.gov/Publications/motor_vehicle_guide.html
    The most important component of any fleet safety program is defining who is allowed to drive on company business. Not just who is assigned a company truck, but who is allowed to drive their personal vehicles on company business. This “non-owned” exposure can create a significant risk for any organization. The liability exposure for anyone operating a vehicle on company business ultimately falls upon the company, and can create as much liability as owned vehicles. Each year, our office sees multiple claims over $1MM involving “non-owned” drivers, so it is critical to make this a part of any fleet safety/ risk management program.
    The other aspect of controlling who is driving on behalf of the company is to ensure there are clear rules for the use of vehicles by non-employees and for non-business use. Insurance coverage follows the vehicle, so if a 16-year-old kid hops in the superintendent’s company truck over the weekend and has a serious auto accident injuring a third party, the company will be responsible and the commercial auto policy will respond. Clearly defined rules for utilization of company vehicles can help reduce this exposure.
    Once the list of individuals allowed to operate a vehicle on company business is identified, the next step is to determine the qualifications each driver must maintain in order to drive on company business. Failure to properly screen drivers will create potential “negligent entrustment” exposures for the organization and negative financial consequences should an individual with a poor driving history be involved in an accident.
    Most insurance companies use the guideline of no more than three moving violations or at fault accidents in the past three years and no more than two violations or accidents in the past year as their guideline for an “acceptable” drivers.  In addition, there are single events which should result in the driver being excluded from any driving privileges such as a DUI, driving without a license, or vehicular homicide. We encourage our clients to not rely on the insurance company to manage their drivers. It is best for new hires to provide their own driving record during the interview process and check motor vehicle record checks annually for your own staff rather than have an insurance company tell you who can and cannot drive for your organization.
    It is also a good risk management practice to require individuals to maintain personal insurance if they are driving on behalf of the company.  These really need to be more that the state minimum limits of $30,000 per person, $60,000 per accident for bodily injury and $25,000 property damage, as they are not adequate to protect the individual or the company from a significant collision.  Requiring a $300,000 combined single limit will help insulate the company’s auto policy and reduce the risk of the individual being personally responsible for damages beyond these state minimums (depending on the type of vehicle this might cost from $50-$100 per year for 10 times the coverage).  The mileage reimbursement rates account for this level of insurance.  Per the IRS mileage calculations, over 10% of the current .58 cent reimbursement rate is to pay for adequate insurance.
    Managing drivers and fleet safety should be an important part of any risk management program. It can take some time to develop policies and procedures specific to your operations and maintain the records for company car drivers, but this is time well spent in order to reduce potential liability exposures for the organization.

    Mr. Gaskamp is responsible for developing partnerships with clients to implement risk control strategies to reduce the organization’s overall cost of risk.  He has over 25 years of insurance and risk management experience and is very active in the safety and risk management community.  He is a national faculty member of the National Alliance Certified Risk Manager’s program and serves on the safety committees for the Association of Building Contractors, Association of General Contractors, Texas Aggregate, Concrete Association (TACA) and the American Society of Safety Professionals (ASSP) Construction Specialty Practice.  He holds a Bachelor of Business Administration in Risk Management and Finance degree from the University of Texas at Austin.   Mark can be reached at mark.gaskamp@marsh.com


Marsh Wortham, a division of Marsh USA Inc., was formed in 2018 upon the combination of Marsh and Wortham Insurance, and consists of Wortham offices in Texas and Marsh offices in Texas, Oklahoma, and Louisiana. Our parent company is Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy, and people. With 75,000 colleagues worldwide and annualized revenue approaching $17 billion, Marsh & McLennan Companies also include global leaders Guy Carpenter, Mercer, and Oliver Wyman.

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