Grey Fleet (non-owned) You have the exposure - do you have the controls

1. Grey Fleet (non-owned) You have the exposure - do you have the controls February 18, 2009 Jim Noble Zurich Services Corp

2. What is “Grey Fleet” Defined: “autos” owned by your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or members of their households, but only while those “autos” are used in your business or your personal affairs • Grey fleet travel refers to mileage in employee-owned vehicles – a grey area Gray Fleet (non-owned) You have the exposure - do you have the controls

3. Examples of Grey Fleet/non-owned exposures • Salespeople, who do not have a “company car” • Manufacturing supervisors • Construction personnel • Consultants • Technical/professional employees • Administrative Assistants, who may run company errands • Home healthcare nurses • Non-employees, doing a favor for an executive officer Gray Fleet (non-owned) You have the exposure - do you have the controls

4. Why have this type of Fleet • Cost? • Management? • Insurance? Gray Fleet (non-owned) You have the exposure - do you have the controls

5. What are the coverage issues? • Employee’s personal auto insurance is primary • Employer is legally responsible for the use of the auto • Business auto policy provides non-owned coverage to provide excess coverage Gray Fleet (non-owned) You have the exposure - do you have the controls

6. Who has Grey Fleet/non-owned auto exposures? Virtually every business has the exposure! Gray Fleet (non-owned) You have the exposure - do you have the controls

7. Insurance needs to analyze the exposure • Total employee count • Number of employees that routinely drive personal autos on company business • How often? • Any types of autos other than private passenger vehicles? • Transport others in non-owned vehicles? • Controls Gray Fleet (non-owned) You have the exposure - do you have the controls

8. Controls impacting account acceptability • License check and review • No “business-use” exclusion on Personal Auto Policy • Minimum limits • Vehicle maintenance – vehicles adequate for intended use • Driver policies and procedures: • Cell-phone policy? • Use pool vehicles when available? Gray Fleet (non-owned) You have the exposure - do you have the controls

9. Hired auto liability Gray Fleet (non-owned) You have the exposure - do you have the controls

10. Hired auto liability: what is it? Defined: “autos” owned you lease, hire, rent or borrow. This does not include any “auto” you lease, hire, rent or borrow from any of your “employees”, partners (if you are a partnership), members (if you are a limited liability company) or members of their households Gray Fleet (non-owned) You have the exposure - do you have the controls

11. Hired auto liability: what is it? • Employee’s personal auto insurance is primary, unless: • Rented in company’s name • Policy is endorsed to provide coverage for hired autos rented in the employee’s name • Employer is legally responsible for the use of the auto • Business auto policy provides hired liability coverage to provide excess (and perhaps primary) coverage Gray Fleet (non-owned) You have the exposure - do you have the controls

12. Examples of hired liability exposures • Employees renting vehicles at the airport • Long-term leased vehicles leased in name of the corporation (unless designated as an “owned auto”) • Short-term lease of an auto to deliver products to customers (unless a temporary substitute auto) Gray Fleet (non-owned) You have the exposure - do you have the controls

13. What underwriting needs • Estimated annual cost of hired vehicles • Use of hired autos • Typical length of time an auto is hired • How many times per year • Type of auto typically hired (passenger car, heavy truck tractor?) • Only employees operating the hired autos? If no, proof of insurance/additional insured status required? Gray Fleet (non-owned) You have the exposure - do you have the controls

14. Conclusion • Both non-owned auto liability coverage, and hired auto liability coverage, are inherent in most companies’ operations • By controlling the exposure, large losses can be minimized, which affects your automobile premium Gray Fleet (non-owned) You have the exposure - do you have the controls

15. Grey Fleet/Non-owned auto coverage • Simplistically, if a individual used their car on behalf of the company and was involved in an accident, the coverage would provide protection above and beyond the individual’s personal insurance • Sometimes primary Gray Fleet (non-owned) You have the exposure - do you have the controls

16. Venue Personality issues Road rage Sympathy Publicity Punitive issues DUI Poor conditions Individual histories Driving records Criminal records Educational records Policy limits Type of claim Outrageous demands Legal system Real life issues Gray Fleet (non-owned) You have the exposure - do you have the controls

17. Points for consideration • Background verification • Maintenance of vehicle • Youthful drivers • Safety records • Vehicle types • Other available insurance • Compliance with regulations Gray Fleet (non-owned) You have the exposure - do you have the controls

18. What if? • We thought we were doing a great service in hiring ex-offenders, working with them to become productive members of society Gray Fleet (non-owned) You have the exposure - do you have the controls

19. What if? • It was my son driving • I had to take a business call so I let my son drive me to the meeting. He was going to take a cab from there. • 38 years old, just got my drivers license • Lived in the city, never needed a car, new sales job, great perks, need to drive to sales call • He cut me off, enough is enough Gray Fleet (non-owned) You have the exposure - do you have the controls

20. What can be checked Information challenged Information use License jurisdiction Educational information Legislation Local National Privacy issues Gray Fleet (non-owned) You have the exposure - do you have the controls

21. Vehicle Condition Glass Brakes Appearance Tires Vehicle use Design for what it is being used for? Passenger exposures Safety concerns Gray Fleet (non-owned) You have the exposure - do you have the controls

22. What if? • I was in a hurry so I took the kid’s car I had no idea he was working on the brakes • I thought it was a great idea to take the client and family to lunch, it was a tight but all 7 got in the car Gray Fleet (non-owned) You have the exposure - do you have the controls

23. Maintenance • Left at the whims of the owner • Inspection program Gray Fleet (non-owned) You have the exposure - do you have the controls

24. What if? • I needed tires but thought I would wait for my commission check - I told the company I would have new tires by the next inspection Gray Fleet (non-owned) You have the exposure - do you have the controls

25. What if? • What do you mean I needed insurance? I thought you gave me insurance!!!! Gray Fleet (non-owned) You have the exposure - do you have the controls

26. Sponsorship • Your name is all over the media • Pre-event • At the event • Post event • Direction and control • What does the public think? • Does liability follow • Vicarious liability • Any protections Gray Fleet (non-owned) You have the exposure - do you have the controls

27. Good citizenship • Volunteers • Part of your business • Do you receive any benefit or is it just good will • Financial gains • Who has control and provides direction • Is you name used in connection with the auto exposures Gray Fleet (non-owned) You have the exposure - do you have the controls

28. Solutions • How do you protect you companies assets? • Verification • Policy and procedure • Minimum driver eligibility (new hire and existing) • License checking procedure • Driver training • Vehicle maintenance/inspections Gray Fleet (non-owned) You have the exposure - do you have the controls

29. Insurance verification • Develop a system to check new employees before they conduct company business • New hires are more prone to crashes • Implement annual certificate reviews • In force coverage • No business exclusion have been added • Limits have not been changed (to save money) • Liability limits need to match policy Gray Fleet (non-owned) You have the exposure - do you have the controls

30. Policies and procedures • Contents • Statement of commitment to transportation safety from top management • Prohibited actions like • driving while impaired • reckless driving, etc • Reporting moving violations and crashes • Seatbelt use (WC issues) • Compliance • Distracted driving • Minimum license standards • Conduct at the crash scene investgation • Maintenance/inspection procedures Gray Fleet (non-owned) You have the exposure - do you have the controls

31. Eligibility standards • Thumbnail version • No more than 3 moving violations in the past three years • No more than 1 crash in the past three years • No serious violations in the past five years • DUI/DWI/Drink Driving • Reckless driving • Hit/Run, etc • Same standard for new and existing employees Gray Fleet (non-owned) You have the exposure - do you have the controls

32. Driver training • It is the employers responsibility to offer initial and ongoing driver training and interventions • Not unlike health and safety • OHSA regulations • Initial/new hire training – cover basic defensive driving • Ongoing training – behavior change happens over time • Interventions – specific training for identified “at risk” behavior • Use recognized programs Gray Fleet (non-owned) You have the exposure - do you have the controls

33. Vehicle maintenance/inspections • Outline acceptable maintenance standards as policy • Outline acceptable inspections standards as policy • Require proof of maintenance • Track mandatory inspections (state, federal) Gray Fleet (non-owned) You have the exposure - do you have the controls

34. Questions? Gray Fleet (non-owned) You have the exposure - do you have the controls

35. Thank You!!! Jim Noble Line of Business Director Zurich Services Corporation +1-719-687-3404 james.noble@zurichna.com Gray Fleet (non-owned) You have the exposure - do you have the controls