Vehicle Title and Liability
Written by Eric Petersen, CIC
Do you know how your vehicles are titled? I know that sounds like a silly question, but you wouldn’t believe the number of times we hear tree care owners being unsure about how each vehicle is titled and any mistakes could cause a major issue with your insurance coverage.
Simply put, the owner of the vehicle assumes the liability of that vehicle. If the Named Insured on the insurance policy doesn’t match the owner that is listed on the vehicle’s title, coverage for a claim could easily be denied by the insurance company.
If your company is well established as a Limited Liability Company (LLC) or Corporation, you probably have over time transitioned the titles of each vehicle into the business’s name, however, it only takes one vehicle to be incorrect to have an issue. Many times it is the vehicle that the owner drives. Whether they initially bought a truck in their personal name or they knew it was going to be the truck that they and their family will be driving, owner’s tend to not be as careful getting these trucks into their company’s name as they should be.
Remember, you started the legal entity (LLC or Corporation) for a reason, to separate your business’s liability from your personal assets. You need to put all vehicles used for business into the business’s name to properly separate that liability. Besides, no business owner wants to have his or her personal assets on the line if an employee loses control of the vehicle and injures someone in a car accident.
If you just started your business, or bought a vehicle right when you opened up your company, chances are you were not be able to buy it in the new LLC’s name because the new business did not have any credit built up. If that is the case, you can still insure the vehicle on your Business Auto policy, but you need to make sure that your personal name is listed as an Additional Insured and Loss Payee for that vehicle.
The same thing goes for leased or long-term rented/borrowed vehicles. If you do not own the vehicle, but have an agreement to use it for an extended period of time, make sure your insurance agent knows so you can get the proper Additional Insured and Loss Payee language on the policy and ensure there will not be a problem if that vehicle is involved in an accident.
To verify the name on the vehicle’s title, take a look at each vehicle’s registration paperwork. The name on the registration will be the same that is on the title as both the registration and title are legal documents. If you find a truck that is not in your business’s name, immediately work on getting that switched or talk to your insurance agent to add the proper insurance language.
If you want to have some guidance on the points mentioned above, reach out to an ArboRisk team member today or be sure to check out our Thrive program at: https://arboriskinsurance.com/arborisks-thrive/