Phone : 281.570.2000
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Complications with Company Cars
In today's society, many individuals are furnished with vehicles that are either owned or leased by the company they work for. This is typically viewed as a "perk" and is considered advantageous to the individual, however, it may create a situation of inadequate insurance if not handled properly.

The Business Auto Policy (BAP) was designed, primarily, to cover the named insured for business use of company owned vehicles. The named insured could be an individual, a partnership, a corporation or a limited liability company and, as long as the person or entity seeking protection is the named insured, no coverage problem exists.

Potential coverage issues are created when someone other than the named insured looks to the BAP for protection. In most cases, employees of the company are not listed as named insured's. Typically, individuals who are provided with a company vehicle rely on the company's BAP to provide them protection that would normally be afforded through the purchase of a Personal Auto Policy (PAP). This decision should be made with caution in view of the fact that the BAP was not designed to cover individuals for personal use exposures. In certain situations, the insurance company writing the BAP may deny coverage to the individual if it is not clear that they were granted permissive use of the vehicle at the time of the claim. This could pose a financial hardship for anyone who finds themselves in the court room with no one to provide them defense.

Coverage deficiencies are minimized when an individual, who is furnished with a company car, also has personally owned autos that are insured on a PAP. Most PAP's contain language that limits or excludes coverage for any vehicle that is "furnished or available for your regular use" This coverage deficiency can be overcome with minor adjustments.

Business-owners who choose to cover all of their personal autos on the company BAP face potential gaps in coverage as well. In this case, the business-owner is losing valuable protection that would be provided automatically on a PAP.

It is important to understand how the BAP and the PAP will respond in each individual situation and address it accordingly. Then, one must realize the coverage deficiencies present in both policy forms and understand how to overcome these deficiencies by the attachment of appropriate endorsements.

For information on solutions to overcome these deficiencies please contact Sharon Gossage or Derek Pierce at (281) 570-2000 or visit our website at
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