A business without company vehicles can still face liability from a traffic collision. When an employee drives a personal car on company business, the employer's exposure is real and frequently uninsured.
Liability follows the employment relationship
Under respondeat superior, an employer can be held responsible for an employee's negligence committed within the scope of employment. Driving to collect supplies or visit a client falls within that scope.
The injured party names both the driver and the employer, because the employer is generally the more collectible defendant. That is a litigation reality rather than a legal technicality.
The employee's personal auto policy responds to the employee, but its limits are typically modest. Once exhausted, the claim continues against the business.
Where the personal policy stops
Personal auto policies insure the named insured and permissive users. They are not written to cover a corporate entity as a defendant.
Some personal policies contain business use exclusions or restrict certain commercial activities such as delivery. Those exclusions turn on the use at the time of the crash.
The result is that the business is exposed above the employee's limits, with nothing responding on its own behalf. The gap is structural rather than accidental.
How hired and non-owned coverage works
Hired and non-owned auto coverage is designed for this situation. It protects the business against liability arising from vehicles it does not own, including employee cars and rented vehicles.
It generally responds in excess of the driver's own insurance, so the personal policy pays first. That ordering keeps the cost of the coverage relatively modest.
It is liability coverage, not physical damage coverage. Damage to the employee's own car remains the employee's problem, which is a common source of friction.
Why the exposure is growing
Remote and distributed work has increased the number of employees running errands and traveling between sites in personal vehicles. Few of those trips are recorded as business use.
Reimbursing mileage is evidence that the travel was for the employer, which supports the scope of employment argument. Businesses reimbursing mileage without corresponding coverage carry an unmatched exposure.
Rented vehicles used for business raise the same issue, with counter offers of damage waivers muddying it further. Written policies on rentals reduce the ambiguity.
Practical controls alongside the coverage
Employers commonly verify that employees driving for work hold their own liability coverage at a stated level, and check driving records where the role involves regular travel. Both are documentation exercises.
A written vehicle use policy setting out when personal cars may be used and who may drive gives the business a defensible standard. Enforcement matters more than the document.
Because vicarious liability doctrines, verification limits and permitted employment practices vary by state and change over time, an attorney and a licensed commercial agent should confirm what applies to a specific business.