Driving for a Cause: What Churches and Volunteers Need to Know About Vehicle Liability Insurance

We have all heard the horror stories of loaning a friend a car, only to face the complexities of that friend wrecking a beloved vehicle. Many people are shocked by how coverage works when borrowing, loaning, renting, or using a vehicle for someone else’s benefit. Let’s take a closer look at where the responsibility lies.

Understanding Vehicle Liability Insurance

When it comes to vehicle liability, understanding the nuances is crucial. This understanding can help you navigate the complexities of insurance coverage and ensure that you are protected.

Borrowed Vehicles

When a vehicle is borrowed, it means “to take and use something that belongs to someone else with the intention of returning it” (Oxford Dictionary). Borrowing is different from stealing because there is an agreement from the owner that you will return the vehicle. This arrangement is convenient, especially in cases of mechanical breakdowns or short-term needs. However, confusion arises when someone other than the vehicle owner is involved in a claim situation.

To determine who is responsible for coverage on a borrowed vehicle, we must look at ownership. Most states have laws requiring vehicle owners to maintain insurance coverage on their vehicles used on public roadways. This law places the burden of responsibility on the owner to have coverage. So, even if you borrow the vehicle with the owner's permission, the financial and insurance implications primarily fall on the vehicle owner. In some cases, secondary coverage may be necessary, especially if two businesses are involved.

Loaned Vehicles

If a borrowed vehicle is primarily the owner's responsibility, then loaning a vehicle also falls on the owner. When you loan your vehicle to another party, you give them permission to use it, making you responsible for their actions while using your vehicle. We’ve all heard stories of young drivers taking their parents’ car for the first time and having an accident. The responsibility falls on the parents, and the same applies to anyone who uses your vehicle.

Most commercial auto insurance carriers have age guidelines and driving record requirements for driving privileges on a business vehicle. Because of this, business owners and non-profit organizations, including churches, are often discouraged from loaning vehicles. Without proper underwriting, organizations may lack important information about the drivers and the vehicle's use. Most parents wouldn’t allow their child’s friend to drive one of their vehicles, and the same principle applies here. By loaning a vehicle, you assume primary responsibility without knowing the risks involved.

Non-Owned Vehicles

Many faith-based organizations utilize volunteers to provide transportation for various church functions and special events. In these cases, volunteers often use their own vehicles to transport others for church services or take campers in their own vans on behalf of the church. This situation brings special considerations regarding using volunteers for transportation. Churches and organizations that utilize non-owned vehicles and drivers should ensure they have a special endorsement designed to provide a layer of protection for the organization under Hired and Non-Owned Vehicle Coverage.

While the primary responsibility for insurance still rests with the vehicle owner, Non-Owned Coverage provides protection for the organization after the primary owner’s coverage has been exhausted. This secondary layer of coverage is often necessary in the event of a serious or catastrophic accident. This endorsement is typically added to an existing auto policy for the organization or as an extension of liability from the General Liability policy.

There are times when a volunteer may use their vehicle for the benefit of an organization and experience damage to their own vehicle. For instance, a collision with a deer is a common occurrence that can result in various levels of damage. The organization may then request that the damage be covered under the Non-Owned Vehicle endorsement. However, there are limitations and conditions on how this coverage applies. Physical Damage coverage, such as Comprehensive and/or Collision coverage, are options included in the personal auto policy. If the individual chooses to forego these coverage options, the Non-Owned Vehicle endorsement will not respond with physical damage coverage. If the individual carries Comprehensive and Collision coverage, the Non-Owned Vehicle coverage may provide limited coverage to cover the deductible for this coverage. It’s essential to know how your policy responds and to educate your volunteers on what they can expect to be covered for their vehicles.

Rented Vehicles

Perhaps the most frequent questions arise from organizations and individuals renting vehicles. There are often questions about how personal auto policies cover rentals and how the Commercial Hired (Rented) and Non-Owned Vehicle Endorsement works. Generally, the personal auto policy provides an extension of coverage with most carriers to cover a rental car for the same coverage you carry on your vehicles. If you purchase and carry only liability insurance, that is what extends to the rental. If you carry Comprehensive and Collision coverage, carriers could extend that coverage with the same deductibles. On the Commercial endorsement, there would be a limit of coverage with a deductible for the rented vehicle. In either situation, there are several factors to consider.

1. Rental agencies typically offer coverage that can be purchased at the time of the rental. This coverage can protect in a couple of ways. First, if you purchase their coverage, you usually have no responsibility for the vehicle. If you are involved in an accident, you would likely just return the vehicle, and your only responsibility would be for the deductible option you purchased. This arrangement avoids confusion or complexity with settling a physical damage claim.

   
   

2. Utilizing the coverage offered by the rental agency is also a way to protect your claims history with your carrier. The claim would not be reported to your insurance company, preventing any accident surcharges or adverse actions from losses. Most rental agencies offer this coverage for an additional cost, but the costs of accident surcharges over three years when using your own coverage would likely exceed the expense of the additional coverage.

   
   

Insurance Liability Coverage Chart

Liability Coverage	Non-Owned	Rented Vehicle Driven By Volunteer	Rented Vehicle Driven By Employee
Primary	Owner	Owner	Owner
Intermediary (Excess)	Driver	Driver	Church
Excess to All Else	Church	Church	Driver

Based on Brotherhood Mutual’s Rented & Non-owned Vehicle Endorseme

As you can see, there are many factors to consider when dealing with borrowing, loaning, renting, or using your vehicle for someone else’s benefit. It’s essential to understand what each of these exposures represents as a risk and how you would be covered in the event of a loss. We are here to help. Please contact us today.

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