Insurance Matters: Are You Covered?

Jim Luff
Posted on June 20, 2016

I recently saw some discussion on Facebook about basic insurance coverages and type of insurance policies operators should carry.  I was stunned to see some operators didn’t feel the need to carry General Liability insurance.  I have heard operators who rent their facilities specifically say they don’t need GL insurance because their landlord carries it.

That’s a scary thought!  I would want my own GL coverage under my own name.  It’s cheap.  If someone sues for a trip and fall while previewing one of your vehicles in your yard, they are going to sue YOU.  It won’t be the landlord.  You may be able to pass blame to the landlord if they fell into a pothole while walking in the yard, but you will have no coverage if you remain named in the lawsuit and don’t have your own policy.

Here is another popular misconception.  If your vehicle is involved in an accident, your Auto Liability policy will pay for your chauffeur’s medical expenses.  It won’t.  In fact, it will only pay for passengers in your vehicle and passengers in the other vehicle if the accident was your chauffeur’s fault.  The only coverage your chauffeur would have would be a Worker’s Compensation policy.  If the chauffeur is an employee, it is mandatory you have this coverage.  If your chauffeur is operating as an independent contractor, the policy covering the vehicle should be his own policy if he is a true independent contractor.  In fact, having his own policy is part of the criteria the IRS uses in determining the true relationship between the chauffeur and the company.

I don’t want to get too far off track here.  From experience in a courtroom on this matter, the bottom line on the legal status of your relationship is viewed like this:  If it's your car payment, your fuel, your insurance and your vehicle maintenance, the guy behind the wheel is your employee.  If he uses his fuel, makes the car payment or makes a lease payment to you and absorbs other operating expenses, he is truly independent. 

Another misconception is that if a chauffeur has another job where he enjoys health care benefits that his own personal insurance will pay for his medical expenses in an accident.  This is true for the immediate treatment.  Once his insurance figures out he was driving a limousine and being compensated, they are coming after you!  If you don’t have Worker’s Comp and your Auto Liability won’t reimburse them for their expenses, guess where they are going to look?  They will sue you and/or your company to recoup their losses, and you could easily end up bankrupt.

Your best bet is to sit down with your insurance agent and thoroughly review your operations and the coverage you need before you need it.  Make sure to explain your relationship with your chauffeurs.

Related Topics: employee benefits, employee vs independent contractor, insurance policies, lawsuits, liability, Safety & Insurance, workers’ comp

Jim Luff Contributing Editor
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