Part I: So, You’ve Got a Company Car - Be Careful

From Insurance for Dummies by Jack Hungelmann

If you’re fortunate enough to have your employer provide you with a company car, you’ve got a tremendous perk. These days, it’s probably worth at least $400 per month to you. Like the rental car situation, it has a few pitfalls; employers are seldom aware of these pitfalls and may not be able to warn you about them.

What I’d like you to draw from this section is a healthy fear — just enough so that if you’re ever furnished a company car, you’ll know that auto insurance limitations exist. Fully informed, you can avoid those types of uses for which you are uninsured, or you can provide supplemental auto insurance for the company car through one of the two insurance strategies I lay out for you in this section.

When you’re furnished a company car, you’re insured while driving it for your liability for injuries and property damage you cause to others by your employer’s Business Auto policy ( BAP). You’re covered when driving other company vehicles as well, and even when driving borrowed or rented vehicles on company business.

There are, however, two driving situations that the company BAP usually won’t provide liability coverage for: When you borrow or rent vehicles for personal use, and when you injure a coworker riding with you in the company car.

If you own and insure another car, the solution to both liability coverage gaps is simple and cheap. For driving borrowed or rented cars, your Personal Auto insurance policy includes liability coverage automatically. Problem solved!

To protect yourself from the risk of injuring coworkers while driving your company car, call your insurance agent to add an Extended Non-Owned Auto endorsement. The annual cost for this optional coverage — about $10 per year.