Affiliates and Insurance: How To Get It Covered

Posted on October 20, 2009

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Get the answers to Frequently Asked Questions about insuring affiliated vehicles and supplying adequate workers compensation coverage.

If you are thinking about doing affiliate work or if you have been doing it for 50 years, it is essential that you handle insurance requirements properly so that both you and your affiliates are covered in the unlikely event of an accident. We asked Michael Marroccoli, regional vice president for The Capacity Group, some frequently asked questions that are on your mind.

What type of insurance should I have if I am doing affiliate work?

If you own a [ground] transportation company, in addition to your own auto liability insurance covering your specific vehicles, you should have coverage for hired and non-owned automobiles. This coverage is usually shown on the declarations page of your policy as Coverage for Vehicles (8 & 9) as opposed to Vehicles 7, which in insurance policy language is only for your specifically listed vehicles. By making certain that you have coverage for hired and non-owned vehicles, you protect your company for liability performed by hired, or non-owned automobiles, like work farmed out to affiliates. I often review a limousine company's insurance policies and I am alarmed when I do not see this coverage included on a policy.  Hired and non-owned auto liability is a very basic and inexpensive coverage, but it is critical to protecting a limousine company in today's marketplace. In addition to providing coverage for affiliate work, in states where livery vehicles may be rented and added to an operator's fleet, rental vehicles also are covered for liability. Hired and non-owned auto liability also provides coverage for a limousine company if one of its employees is involved in an accident with one of their personally owned vehicles and the company is sued.

For example, if an employee is driving his own vehicle on company business to run an errand, go to the bank, or to go on a sales call or customer visit, and is involved in an accident, it is likely that the employer would be named in a lawsuit by the other party although the vehicle is not owned by the limousine operation. I review hundreds of policies for limousine companies all over the country, and when I discover that hired and non-owned coverage is not included on a policy, it may mean that the broker is not paying attention to the details. Some companies will not write this type of insurance for fleets smaller than three vehicles.

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