How to Protect Yourself against Yourself

Many times we as business owners can be our own worst enemy. It is sometimes easier (and less expensive in the short run) to buy our teenage children a vehicle in the company name and let them drive it as much as they need (or just let them drive our expensive company-owned vehicle). This sounds like a good idea at first, but upon further examination, not so much!

We have had a couple examples of this lately- one specific incident especially comes to mind. One of our commercial clients has a son that turned 14 and got his learner’s permit. Instead of buying an old beat-up car to allow his son to learn the nuances of driving in this fast-paced world (which I highly recommend for every family), he let his son drive his company-owned vehicle (Dad was in the car with him, thank goodness!). As they were driving, his Dad told him to pull up to the building where the business was located (they don’t own the building, just leasing it). As the 14 year-old pulled up to the building, he pushed on the accelerator instead of the brake, and ran through the outside wall of the building, damaging the building and the vehicle. Ouch!!!

There are lots of issues here:

---Fixing the company vehicle will be paid for by his commercial auto policy- no problem. Except- having a 14 year-old driving your company vehicle will more than likely get the company non-renewed (or worse- cancelled) by thecarrier. At that point, it becomes more difficult and more expensive to find commercial auto coverage the next time around.

---Since the business owner is leasing the building and has care, custody and control of the building and he ran into his own building, his auto policy would not cover the damage to the building. That part of the claim was denied.

---In addition, since he has possession of the building, his General Liability policy denied coverage as well. As a matter of fact, none of his policies will cover the cost of the damage to the building (approximately $15,000-$20,000).

---The business owner has a Personal Auto Policy and a Personal Umbrella policy as well. However, neither policy will cover the claim either.

As a matter of fact, no coverage is available for fixing the damage to the building. This all stemmed from allowing a teenage driver to drive a company vehicle, remember. The business owner will probably have a lawsuit on his hands from the building owner, whose insurance will have to pay for the claim.

This could have been worse. What if the 14 year-old had been involved in an at-fault accident in the company vehicle and someone had died? This business owner could have been putting his entire business at risk just to let a 14 year-old drive for a little bit. It’s just not worth the risk. There are other, more reasonable alternatives.

The best practice is to call you insurance agent for solutions BEFORE you make these decisions rather than AFTER!!!

Bobby Bland PWCA, CIC
Vice President
Commercial Risk Service