Small Business Owners and Uninsured Motorist Coverage

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Uninsured motorist coverage is a must these days. Up to 25 percent of the vehicles on the road may not have liability insurance. The ones that do often only have a “full coverage” policy, which means they bought the least amount of coverage they needed in order to comply with the Oregon or Washington full coverage law.

In both states this only requires liability coverage of $25,000. Unfortunately this won’t go very far if they hurt someone seriously, which is why it is so important to purchase uninsured motorist coverage. This coverage will pay you what the other driver’s company would have, had that driver carried insurance. In Washington, your coverage can be stacked on top of the guilty driver’s liability coverage if your claim value exceeds their policy. So, if he has a “full coverage” $25,000 policy and your medical bills alone exceed $30,000, you can access both his policy and yours to recoup some of your losses.

Not so in Oregon. For every dollar the guilty driver had in liability insurance, your uninsured motorist coverage is reduced by a dollar. So if you each had $25,000 in coverage, you’d only be able to get his $25,000. Your Oregon policy would provide zero benefits.


Another problem we see on a not-too-infrequent basis is small business owners who use their business vehicle for personal use. Although there is nothing wrong with that, it can lead to unfortunate circumstances if injured by an uninsured motorist.

A recent case is an example. The president of a local small construction company was injured when he was struck by an uninsured motorist while walking in a crosswalk. In this situation you simply turn the claim over to the uninsured motorist coverage on your auto policy. They will pay you what you would have received had this person been insured. Many people don’t realize that uninsured motorist coverage protects you in a crosswalk, even if you aren’t using your car. However, if the car you use is registered to your small business, you may be in trouble. That’s because if you were not on a business errand at the time, there won’t be any coverage.

In order to collect the uninsured motorist benefits under that policy if hurt in a crosswalk, the walk must have been for a company purpose. If it wasn’t you don’t have a claim. That is what happened to our local small business owner.  He was seriously injured while walking in a crosswalk. The driver who hit him was uninsured. He figured he was covered since he had uninsured motorist coverage on his business policy, and that vehicle was his primary car for both work and pleasure. Unfortunately, the insurance company denied his claim. He sued the company, but the Court of Appeals upheld the denial.

The lesson to be learned here is to not assume your business policy will cover you if hurt as a pedestrian while of the job. Your personal auto policy will, but your company vehicle policy will not.

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