As a Company director, most of your time is spent thinking about growth, your people and of course, delivering the products and services your customers expect. What you probably aren’t thinking about is whether or not your personal car is covered by the company’s motor trade insurance but ignoring this this could have serious personal and professional repercussions.
As one of the country’s leading motor trade insurers, AXA Commercial provides protection for thousands of businesses of all shapes and sizes in a range of sectors – from small operations right through to large corporates.
And despite that variety, one easily avoidable risk keeps raising its head. There has sadly been many examples where Company directors have wrongly assumed that their privately owned car, used for work as well as leisure, is covered under the company’s motor trade policy.
Whilst in most cases cover for a directors privately owned vehicle can be added to the companies motor trade insurance policy, it’s not automatic and those assumptions are leaving some exposed to claims being denied, being convicted for uninsured driving or even having their vehicle seized by the police.
“It sounds pretty dramatic but it’s one that we see coming up time and time again,” says Louis Rudd, Head of Motor Trade at AXA Commercial. “By assuming their personal car is covered by the company’s policy, people are completely unaware of the risks they’re running and doing so on a daily basis.”
It all comes down to the legal ownership of the vehicle and Louis provides a couple of examples of how vehicle owners and directors can be caught out.
- The policyholder adds a vehicle to the MID database without any interaction with their broker or insurer. So far, so good. But a few months in, and the car is involved in an accident. During the claims validation process, it’s found that the car isn’t owned by ABC Motors Limited (as per the policy) but personally, by a company director. As a result, the car isn’t insured and the claim is denied.
- In another scenario, the driver is stopped by police but the certificate of insurance is in the name of ABC Motors Limited, not the vehicle owner’s name. Following a few more checks, the police seize the vehicle for being driven uninsured and also leaving the driver to face a potential further risk of prosecution and conviction for committing a motoring offence.
But the good news is that these risks are easily managed.
“It’s really an awareness issue because it’s usually a simple admin job to add a company director’s personal car to their company’s motor trade policy,” explains Louis.
“Insurers can’t just assume that directors want their personal cars covered by the company policy and we can’t automatically add them without knowing details of the vehicle first to agree the cover and issue a valid motor insurance certificate.”
The answer? As with most questions around insurance, speak to your broker.
“A quick call to your broker will clarify whether or not your insurer has been informed of the correct ownership of these vehicles, whether or not the policy has been extended to cover privately-owned vehicles and importantly if a certificate of motor insurance has been issued to cover the director’s privately owned car,” he says.
“Insurers just need to know details of the directors privately owned vehicle to be covered, who you’d like to drive the car and when and where they’re likely to drive it. For the majority, such requests for an extension to cover the privately owned vehicle will be accepted and it’s simply just a process of adding the vehicle to the motor trade policy.
“That call to your broker will only take a few minutes but it will protect you from the disruption and potential cost of denied claims or worse, having your vehicle seized and risking further prosecution.”