Commercial auto insurance for vehicles that work.

Employees driving their own cars for work

When an employee wrecks their own car on a work errand in California, three rules decide who pays. Other states set their own priority and reimbursement rules.

Whose policy goes first

Insurance Code 11580.9(d) says that, except for the special rules in subdivisions (a) through (c) for auto businesses, certain rentals and leases, and loading and unloading, the policy in which the vehicle is described or rated as an owned automobile is primary and the others are excess. For an employee's own car, that is usually the employee's personal policy. ISO's business auto form lines up: it is primary for covered autos you own and excess over other collectible insurance for covered autos you don't own.

Who the business policy protects

Symbol 9 includes an employee's car while it's used in your business, but the form's Who Is An Insured section leaves out your employee when the covered auto is owned by that employee or a household member. Non-owned auto liability is designed to protect the business, not the employee.

What you owe the employee

Labor Code 2802 requires an employer to indemnify an employee for necessary expenditures or losses incurred in direct consequence of doing the job. In a 1993 letter, the DLSE's chief counsel accepted the IRS mileage rate as reasonable, said a reasonable mileage reimbursement covers operating costs including accident or theft damage unless the employer was negligent, and said an employer may not require an employee to buy insurance at the employee's own cost. A 1998 DLSE letter said an employer may require limits above the legal minimum if it reimburses the cost and doesn't dictate the insurer, and that paying the IRS rate isn't conclusive: an employee who proves higher actual costs gets the difference. These are older agency letters, so have employment counsel review your reimbursement policy. I ask for a list of everyone who drives for you and their personal declarations pages.

Driver records and DMV's Employer Pull Notice program

California lets employers watch driver records between renewals. Under Vehicle Code 1808.1, an employer must enroll in DMV's Employer Pull Notice program all employed drivers of a vehicle that requires:

• A class A or class B license.
• A class C license with certain endorsements, or one of the driver certificates the statute lists.
• Carrying passengers for compensation in a vehicle seating 10 or fewer, including the driver, for a charter-party carrier or passenger stage corporation under a Public Utilities Commission certificate or permit, or for a permitted taxicab company.

DMV sends an enrolled driver's record at enrollment, after a conviction, failure to appear, accident, suspension, revocation or other action, and once a year. The statute requires the employer to get a report at least every 12 months, verify the license hasn't been suspended or revoked, the point count and any DUI convictions, then sign, date and keep it at the principal place of business. A new hire's report must be issued less than 30 days before employment. A casual driver, employed fewer than 30 days in the preceding six months, needs a report issued less than six months before employment. An employer that, after receiving a record, employs or continues to employ as a driver someone with a disqualifying action is guilty of a public offense, punishable by up to six months in county jail, a fine up to $1,000, or both.

Drivers the law doesn't require, like staff who drive company cars, can be enrolled if they consent on DMV form INF 1101, which you keep at your principal place of business. If you're enrolled, I send underwriters those records with your driver list.