NEW England HVAC Insider Guest Column What Is DOC By Christopher F. Hawthorne CPCU, CRIS, CIC, LIA

The need for Drive Other Car (DOC) coverage is a good example of when the accounting profession gives a client advice and may unknowingly put the client at risk. It is common to meet a business owner that owns all vehicles used both personally and commercially in the business name. In other words, the business owner does not own a vehicle in his or her personal name. The reason for this is always the same. The accountant advised this ownership structure for tax savings. This ownership structure puts the client in a position of having no auto insurance coverage in certain situations. Please note that a commercial auto policy works a little differently than a MA Personal Auto policy. The MA Personal Auto policy will cover anyone using the insured vehicle if operating with the permission if the insured and it will also follow the insured and those listed on the policy into any other personal vehicle as long as they are operating the vehicle with permission. It is a very flexible policy. The Commercial Auto policy is not so flexible. The Commercial policy states that it will cover those operating the vehicles specifically listed on the policy and that it will defend the Named Insured, the business. This design could leave the business owner in harms way when they are operating a vehicle not listed on the Commercial Auto policy. Story continues below ↓ advertisement | your ad here

An example being, a business owner attending a family cookout and due to getting there early has his or her auto blocked in by other guests. The host asks our business owner to run to the store for more ice and to take their auto, which is not blocked in. During the trip, the business owner hits and injures someone who then sues the driver as well as the owner of the vehicle. What if the owner, the host, unknowingly had their coverage cancelled for non-payment due to an oversight or if the owner simply carried very low liability limits. Our business owner who is used to having $1,000,000 of protection from their Commercial Auto policy suddenly finds himself or herself on the other end of a lawsuit with little or no coverage. Had the business owner owned at least one vehicle in their personal name the business owner would have coverage of their choosing to protect them from the suit. If a business owner finds themselves in the position of not owning a vehicle in their personal name, there are two solutions. The best solution is to transfer ownership for a vehicle from the business to the personal name. The unfortunate aspect of this solution is that a new sales tax is incurred. The next best solution is to add DOC coverage to the commercial auto policy. This coverage will act as a bridge for when the business owner is using a vehicle not named on the Commercial Auto policy and for nonbusiness purposes such as our prior example. When DOC coverage is added, it is added in the name of the driver. The coverage will protect the named person and a spouse. It is important to know it will not automatically cover any other family members. Therefore each family member other than the spouse must be named separately. The typical cost is typically $350 per named driver. The issue of DOC coverage is a perfect example of why your insurance broker should be included in the conversations with your accountant and attorney before a major decision is made and not after the fact. I hope you find this helpful.  Chris Hawthorne has specialized in working with contractors since 1995. He is a licensed insurance broker and advisor representing T G A Cross Insurance Agency, Inc located in Wakefield, MA and can be reached at 781- 914-1038                                                            ###