PROTECT YOUR BUSINESS

Garage policies and underwriting rules vary from company to company, admitted, non-admitted, agent directly appointed, agent working through a Managing General Agent, etc.  The bottom line is that most – if not all – insurance companies will not provide coverage for unlicensed employee drivers using an insured vehicle with permission, regardless of the reasons they are unlicensed. Company deny claims involving permissive use by unlicensed employee drivers and, while we debate until the cows come home what went wrong in the above situation, the claim is still unpaid. The insurance company’s position is that the dealer is responsible for hiring licensed drivers.

The picture becomes more dicey when we are talking about contract drivers and/or customers’ test driving. Some policies include endorsements excluding protection involving all unlicensed -with permission- drivers; while others include as a Known Unlicensed Driver endorsement applicable to customers and/or contract drivers. Under such an endorsement, the driver is not protected, but you as the vehicle owner and dealer are: provided you have in your possession a copy of what appears to be a valid drivers license. The license may be forged, suspended or otherwise not relevant to the actual driver of the vehicle, but you, as the vehicle’s owner, have made a diligent effort to verify the driver’s license.

The safest approach is to focus on preventative solutions. This situation could have been avoided with a little foresight.   The agent may have warned the dealer not to allow the new employee to drive until the company issued an okay.  We don’t know.  After all, the employee had what looked like a valid drivers license, and as a cautious dealer, he had asked the employee about his driving record.  Ninety-nine times out of one hundred, a warning would not have mattered anyway.  No accident would have occurred.  The company underwriter would not have been on vacation.  Her assistant would not have been over-whelmed.  But, it is the possibility of that one-hundredth time that makes being proactive in protecting yourself and your business important.