This article is used to inform you about an important update to Indiana law that may have implications for your Hired & Non-Owned Auto (HNOA) insurance coverage. This change pertains to the offering of Uninsured / Underinsured Motorist (UM/UIM) coverage for HNOA policies in Indiana. Insurance Companies operating in Indiana are no longer required to provide you UM/UIM coverage If you do not have any scheduled vehicles on your’ auto insurance policy. This shift may have important ramifications for you and your employees, if your’ insurance company sends you a Notice of Reduced Coverage that would take effect at Policy Renewal dropping this coverage. In this article, we will discuss the changes, the potential issues they raise, and provide recommendations to ensure your employees and business are adequately protected.
Understanding the Changes
Previously, HNOA policies in Indiana included UM/UIM coverage, offering added protection in case your employees were involved in an accident with an uninsured or underinsured motorist. However, with the recent legislative change, this coverage is no longer a mandatory inclusion in HNOA policies. As a result, your employees may not have sufficient coverage for physical damage to their personal vehicles or rental cars in case of such accidents.
The Impact on Employee Vehicles and Rental Cars
When your employees use their personal vehicles or rental cars for business purposes, the primary insurance coverage for physical damage will typically be their personal auto insurance or the rental car company’s insurance. However, it’s crucial to be aware that these coverages may not fully address the costs in the event of a significant accident.
Employer Liability for Uninsured Damage
If an employee is involved in an accident with an uninsured motorist while driving their personal vehicle for business purposes, the employer may be held vicariously liable for any uninsured damage to the vehicle. This means that your company could be responsible for covering the damage if the employee’s UM/UIM limit for physical damage is insufficient.
The same liability extends to rental cars. If an employee is in an accident with an uninsured motorist while driving a rental car for business purposes and declines rental car coverage, the employer may be vicariously liable for any uninsured damage to the rental car.
Recommendations for Mitigating Risks
To mitigate these risks and protect both your employees and your business, we offer the following recommendations:
Employee Personal Insurance Review: Encourage your employees to check with their personal insurance carriers to ensure they have adequate coverage for physical damage to their vehicles when used for business purposes.
UM/UIM PD Coverage: Consider having your employees carry an Uninsured/Underinsured Motorist Property Damage (UM/UIM PD) limit of at least $50,000 or an amount that you deem appropriate. This will ensure they have sufficient coverage for physical damage to rental cars in the event of an accident with an uninsured or underinsured motorist. Either way, it is important to ensure the limit of insurance is adequate for the vehicles being utilized for your business.
Rental Car Coverage: Evaluate your company’s policy regarding payment for rental car coverage. If your employees have a high deductible on their personal auto insurance or if your company is concerned about potential liability for damages, it may be wise to consider purchasing rental car coverage.
It’s important to understand that this article provides general information and is not a substitute for legal advice. An employer’s liability for uninsured damage to employee vehicles or rental cars will depend on the specific circumstances of each case and the state in which the accident occurs. We strongly advise consulting with an attorney to discuss your specific situation.
Your protection and peace of mind are our top priorities, and we are here to assist you with any questions or concerns regarding this recent change in Indiana law and its implications for your HNOA insurance coverage. If you have any further inquiries or require additional information, please do not hesitate to reach out to us.
For contact:
Zach Finn 765.429.5001 zfinn@henriott.com
About Henriott Group
Henriott is an independent Risk Management firm dedicated to helping clients prevent, manage, and recover from critical incidents. Working in both public and private entities through effective risk management, risk financing, commercial insurance, employee benefits, human resources, crisis management, contingency planning, and crisis response.
CONTACT
Grace Pritchett, Communications (765) 838-8610 | gpritchett@henriott.com
