A Primer on Motor Vehicle Insurance Coverage

July 14, 2011

Katharine M. Nohr, Esq.
Nohr Sports Risk Management, LLC

Does your organization use motor vehicles to transport athletes, spectators or others? If so, it is essential for risk management planning to make sure that such vehicles are fully insured in compliance with applicable law. It is a good idea to talk with your insurance agent or broker about the insurance policies that have been purchased in order to ensure that there is sufficient coverage. Policy exclusions should be scrutinized to determine if there will be coverage for the uses of the motor vehicles in question. You will also want to make sure that policy limits are high enough to cover your organization in the case of a catastrophic accident.
Many states have enacted laws requiring that each vehicle carry “no-fault” insurance. No-fault insurance is “first party” insurance and generally covers those people that are in the vehicle which is insured, or pedestrians or bicyclists that are hit by the vehicle. This insurance pays for medical care and possibly wage loss and other benefits immediately, without regard to fault. The eligible injured persons do not have to file a lawsuit against the at-fault party in order to get paid. There should also be bodily injury liability coverage on vehicles used by an organization. In the event that the driver of the vehicle negligently causes an accident, the bodily injury liability coverage should cover an organization up to the limits of the policy. Underinsured motorist coverage can also be purchased to cover a person if it turns out that the driver who was at fault in the accident does not have enough insurance. This insurance is called UIM insurance and is also first party coverage, purchased from a person’s own insurance company. Uninsured motorist insurance coverage can also be purchased from a person’s own insurance carrier. This insurance will provide coverage if the at-fault driver is not insured. In that event, an injured person would seek insurance coverage directly from his or her own insurance company under a “UM” policy.

Your organization will receive additional insurance protection by purchasing umbrella or excess coverage. Usually these policies are the least expensive way to increase insurance coverage that is available for catastrophic accidents. If employees of an organization will be driving the vehicles used to transport athletes and others, they will likely be covered by the company’s worker’s compensation policy if an accident occurs while they are in the course and scope of their employment. Property damage insurance or collision coverage should also be part of any motor vehicle policy. This insurance coverage pays for the damage to any vehicles that occur because of the fault of the driver. Reductions in insurance premiums may be obtained by showing good driving records, by instituting safe driving policies, by undertaking certain safe driving practices or by having a large deductible or retention.

Understanding the basics of motor vehicle insurance coverage will go a long way in your organizations risk management planning. Drive safely!

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