Potential Coverage Gap from Domestic Employees’ Owned Autos

If you have a domestic employee, such as a gardener, housekeeper, or nanny, who drives his or her own auto while working for you, there is a potential for you to incur liability arising from their driving that would not be adequately insured. If your employee negligently causes an accident, you as the employer can be drawn into the lawsuit and held liable. Your employee’s own insurance, if any, will protect you up to its policy limits, but you are on your own after that. And your personal auto policy may not respond to cover the difference. The courts have ruled in different ways on these types of loss situations.

For example, assume your housekeeper negligently injures someone in a serious accident in her own vehicle while out buying groceries for your household. Further assume she has low liability limits or even no auto liability insurance. If she is sued, the injured party may uncover information about you, her employer, and how her driving in this incident was related to her employment with you. As a result, your “deep pockets” may just get you named in the lawsuit.

If you engage domestic employees or contract workers who may drive their vehicles in their work for you, the following tips may prove helpful.

• Ask any employees or prospective employees to provide you a current copy of their driving record. The employee can order this online through http://www.dmv.org/driving-record.php. If they do not have a good driving history, do not allow them to run errands for you.
• If the domestic employee has a good driving record and you ask her to occasionally use her own car to run errands, ask for a copy of her current auto policy and verify that it has at least moderate liability limits.
• Ask your insurance agent to confirm with your auto insurance company underwriter that your PAP policy will provide a defense and cover judgments in excess of your employee’s limits if you are ever named in one of these suits. If possible, get a copy of a letter from the underwriter.
• If the domestic employee has an excellent driving record and a sterling employment history with you, consider having her use your auto to run errands to avoid any question that your PAP will protect you if she negligently causes an accident while working for you.
• Periodically review your employee’s driving record and auto insurance policy.
• Consider procuring a personal umbrella policy that will normally provide coverage on top of your PAP. However, if the loss is not covered under your auto policy but is covered under the umbrella form, you would only be responsible for the retained limit or deductible amount, which ranges from $250 to $1,000.

Pitfalls of Purchasing Travel Insurance Online

If you are planning your family's winter vacation, you may want to consider vacation-related losses. Travel insurance can be purchased to cover this potentially large exposure. It is designed to protect an insured from a wide variety of travel-related losses, including trip cancellation or interruption, emergency medical events, emergency evacuation, lost or delayed baggage, personal effects, lost or stolen passports and visas, and legal expenses. This coverage is increasingly purchased through the Internet.

The following are some helpful tips to review when considering the purchase of travel insurance online.

• When you purchase travel insurance online, determine if you will immediately receive a policy number along with a printable copy of your policy documentation. Some Web sites are not fully automated and cannot complete your purchase. However, they make it look like they can. If you do not receive an immediate policy number, then you have ordered from a Web site that simply holds your data until an operator manually types your order onto the insurer’s Web site. If this happens to you, cancel the policy. An agent is required by law to give you a full refund (minus a small administration fee of around $5) within 10 days of your purchase. The practice of manually typing orders is less than ideal because there are many potential problems with security, typing errors, and privacy.
• Is the agent affiliated with the insurance company? Call the insurance company to check if the agent you are using is, in fact, one of their representatives. Some Web sites sell policies for insurers even though they are not agents.
• Does the Web site list each plan (with slight distinctions) several times? Some Web sites list each plan multiple times because they lack the technology to allow options to be selected by the user. Unfortunately, this makes comparing policies very confusing because you are presented with a single plan several times, each with only minor differences.
• Avoid Web sites you access via spam because these are often disreputable. A better way of finding established and reputable Web sites is to utilize search engines that link you to the travel insurance Web site or to ask friends or family if they have had excellent experiences with any online travel insurance services.

If you would like more information about vacation insurance, please contact Hunter Insurance at (401) 769-9500.