Vehicle Accident

Costliness: #2

$45,000

Frequency: #10

< 5%

How Car Accidents Can Hurt Small Businesses

Salespeople drive from client to client. Delivery drivers spend all day on the road. Employees rent cars to attend conventions and trade shows. In a single moment, any of these individuals could be involved in a serious accident that results in injury – or even death.

Most accidents will be minor (think fender benders and mild whiplash). But a bad collision can leave a vehicle totaled and its occupants in the hospital. If your employees are involved, the insurance claim can be sky-high, and you may be liable for their medical costs as well as those of other people caught in the crash.

Which Industries Are Most at Risk of Car Accidents?

Sales

Shipping

Delivery services (e.g., package delivery, food delivery, florist)

Any business that owns or rents vehicles

Small Business Insurance Policies to Help Manage Car-Related Risks

Personal auto insurance policies typically don’t cover business-related driving incidents. Small business auto insurance falls into two categories:

  • Commercial Auto Insurance: Commercial Auto can help cover expenses that arise from an accident involving a business-owned vehicle, including medical costs, repair costs, and legal expenses.
  • Hired & Non-Owned Auto Insurance: HNOA can provide similar coverage for accidents involving vehicles that are operated on behalf of your business, not vehicles your business owns (i.e., employee-owned cars and rented vehicles).
  • Write a company policy to spell out rules for safe driving. Include incentives and displinary action for violating the rules.

  • Check employee driving records if they drive for work purposes.

  • Provide driver safety training programs, seminars, and workshops on a regular basis.

  • Avoid texting or calling employees when you know they’re driving.

  • Research crash rate and safety features before leasing or purchasing company vehicles.

Auto safety should be a top priority if your employees are required to drive for work.

According to OSHA’s document “Guidelines for Employers to Reduce Motor Vehicle Crashes,” an on-the-job crash that results in employee injury costs an average of $74,000 to the employer, and a crash that involves a fatality can exceed $500,000. Luckily, small business insurance policies can help cover these costs. But that coverage doesn’t even take into account the emotional toll or the effects on business morale.

“Business owners should help to make it easier for the employees to do their job while driving,” says Scott Marshall (@SafeDriver), driving safety instructor and owner of The Safe Driver blog.

Avoid bothering employees with phone calls and texts while they’re on the road and encourage safe practices. “Promote having their seating compartment free from distractions,” Marshall says. “Perhaps even reward it.” After all, incentivizing good behavior can minimize accident rates, which prevents you from having to make a claim on your small business auto insurance policy.

Marshall also says that, when selecting company vehicles, safety should be a top consideration. Consider asking these questions:

  • What’s the crash rate?
  • How many airbags does it have?
  • Does it have brake assist?

“When employers openly let their employees know they have these types of vehicles, they show the employees that safety is a priority,” Marshall says.

Lastly, ensure you have the right type of small business auto insurance in case an accident does happen.