🚗 The Clause That Doesn't Exist In Your Commercial Auto Policy

Every PM company runs on personal vehicles. Your maintenance coordinator drives her own car to a leak call. Your leasing agent uses her SUV to run showings on a Saturday. Your operations manager drops by an owner meeting in his truck. Somebody on the team makes a Home Depot run for a vacant turn. Nobody thinks twice. It's how the business moves.

Now picture this. Tuesday morning. Your maintenance coordinator drives to a vacant unit to check a leak the outgoing tenant reported. On the way back, she runs a red light. T-bones a minivan. Driver and two kids in the hospital.

Her personal auto policy has $100,000 in bodily injury coverage. The lawsuit comes in at $1.4 million.

Whose problem is that?

Spoiler: it's yours.

The clause you assumed was there isn't

We had to figure this out ourselves the hard way — not because of an accident, but because we finally sat down to read what our commercial auto policy actually covered and realized the gap was enormous. We're sharing what we built because most operators are running with the exact same gap and don't know it yet.

Most PM company owners assume their commercial auto policy covers their team driving for work. It doesn't. Not the way you think.

A standard commercial auto policy covers vehicles your business owns. Your maintenance van. The branded pickup. The car titled to the LLC. If your team is driving anything else — their own car, their spouse's car, a borrowed truck — your commercial policy probably has nothing to say about it.

The coverage you actually need for that scenario is called Hired and Non-Owned Auto (HNOA). It's a separate endorsement. Without it, you're exposed. With it, here's how it actually works: the employee's personal auto policy pays first up to its limit, and your business's non-owned coverage pays second when the lawsuit exceeds what the employee carries.

That second-pay structure sounds reasonable until you do the math. Most personal auto policies in Wisconsin carry $25,000/$50,000 to $100,000/$300,000 in bodily injury limits because that's what's affordable. A serious accident — multiple injuries, hospital stays, lost wages, permanent disability — blows past those limits before the ambulance leaves the scene. Everything above the personal limit comes looking for the deepest pocket in the room. That's the employer.

Why this lands on you specifically

The legal doctrine that puts the bill on your desk is called respondeat superior, Latin for "let the master answer". Most operators know it as vicarious liability. The principle is simple: if an employee causes harm while doing work for you, you're legally on the hook for it, regardless of whose car they were driving.

This isn't theoretical. The Tracy Morgan accident — the comedian who was hit by a Walmart driver on the New Jersey Turnpike — settled for approximately $90 million against Walmart, not the driver. That's an extreme case with a celebrity plaintiff, but the underlying structure is the same one that would apply to your maintenance coordinator on a Tuesday morning. The plaintiff's attorney's first move isn't to sue the employee. It's to sue you. You have the assets, the insurance, the business with revenue. The employee has a Honda Civic and a personal policy that maxed out at the first injury.

Vicarious liability applies whether the trip serves the employer's interests, occurs during work hours, or is performed at the employer's direction. Property visits qualify. Supply runs qualify. Driving between properties qualifies. Owner meetings qualify. Lunch runs probably don't, but a stop for coffee on the way to a showing? That's a fact dispute you don't want to be in.

The agreement we built — and what's in it

Insurance is the safety net. The Personal Vehicle Use Agreement is the structure underneath it.

When we sat down to draft ours, the first thing we noticed was that we'd never asked our team about their personal auto coverage. Not once. Two years of property visits, owner meetings, supply runs, and vendor coordination — and we'd never asked anyone driving for us what their policy actually covered.

That ended. Here's what we put in the document, and why each piece matters.

1. Primary insurance requirements. Every employee who drives for company business carries their own auto policy with minimum bodily injury limits we specify — not state minimums.Wisconsin's state minimum is $25,000 per person and $50,000 per accident, which is a joke when applied to a real accident. Most reasonable agreements require $100,000/$300,000 at the floor. We're moving ours higher.

2. Mileage reimbursement scope. What trips count. What trips don't. Whether the commute to the office is included (it isn't, usually). How miles are tracked and submitted. The IRS standard mileage rate is the easy default, but the scope — what counts as business use — is where the disputes happen.

3. Accident reporting obligations. What the employee has to do within the first hour, the first 24 hours, and the first week after any incident — even minor ones. Photos. Police report. Notification to us. Notification to their insurer. Notification to our insurer. The reporting clock matters because your business's non-owned coverage requires timely notice, and missing that window can void coverage entirely.

4. Indemnification language. Where the employee's responsibility ends and the company's begins. This is the legal language that protects both parties and prevents the kind of finger-pointing that turns a manageable claim into a six-figure courtroom fight.

5. The personal-versus-commercial gap. The most important clause and the one most operators miss. It establishes that the employee's personal policy is primary, the company's HNOA is excess, and that there will be a company HNOA policy in force. Without this, you have employees driving for work with a vague understanding that "everyone's covered somehow." That's not coverage. That's hope.

What this document does — and what it doesn't

This is the kind of document that does nothing on a normal day. Nobody reads it. Nobody references it. It sits in the employee file and the operations folder and the binder nobody opens.

Until the day something goes wrong. Then it does everything.

It establishes — in writing, signed, dated — that the employee understood their insurance was primary. That they were required to carry specific limits. That they agreed to specific reporting timelines. That they accepted a defined scope of business use. The plaintiff's attorney can still come after you. But you walk into that conversation with documentation instead of a shrug.

A six-figure lawsuit is one accident away. Most PM operators are running on "we'll figure it out if it happens." The agreement is the thing that means you've already figured it out.

The free template is here. Make a copy. Swap in your company name. Run it past your attorney before you roll it out — this is one of the documents where the legal review pays for itself the first time it matters.

The insurance call to make this week

Two phone calls. That's the homework.

Call one: your commercial auto carrier. Ask them point-blank whether you have Hired and Non-Owned Auto coverage on your current policy. Get the limit. Get it in writing. If you don't have it, ask for a quote — for most small PM operations, HNOA adds a few hundred dollars a year to a Business Owner's Policy. It is the cheapest insurance you will ever buy relative to what it covers.

Call two: your general liability carrier, if it's separate. HNOA can sometimes be added to general liability instead of commercial auto. Ask the question. Don't assume your broker handled it three years ago.

You don't need to be a lawyer to make those two calls. You just need to make them this week instead of next year. The accident doesn't wait for your calendar.

💬 We'd Love Your Input

We're curious how other PM operators are handling this one.

• Have you ever sat down to confirm what your commercial auto policy actually covers when your team drives their own vehicles for work?
• Do you have something like a Personal Vehicle Use Agreement in place, or is it more of a handshake right now?
• What's the part of this that feels hardest to tackle — the policy review, the team conversation, or finding the time to do either?

Hit reply and let us know. We're always learning from how other operations handle the same gaps.

See you in the next one.