To loan your vehicle or not, that is the question

When you are blessed with abundance, you should share it—right? Let’s say your house of worship owns two 15-passenger vans, and a local nonprofit wants to borrow them for a special field trip. Doesn’t it make sense that you should help them in their time of need?

Before you loan your vehicles out to other organizations or individuals within your community, however, there are a few risk management aspects you should consider. For one thing, you lose control over many aspects of how the vehicle is operated, including:

1. Who is driving the vehicle – Your organization likely has a process of vetting vehicle drivers, including checking their motor vehicle record (MVR), ensuring they are above a certain age and requiring them to take a defensive driving test. Another organization may not take the same precautions. Additionally, certain states require a commercial driver’s license (CDL) to operate a 15-passenger van, so you will need to make sure the borrowing person or organization understands this.

2. How the vehicle is operated – If your vehicle is branded with the name of your organization and the borrower drives it irresponsibly, that could reflect poorly on you. Also, because 15-passenger vans handle differently than other vehicles on the road, it is important to have a driver who can handle the vehicle effectively in emergency situations.

3. How the passengers are kept safe – You may have certain rules that are followed in your vehicles, including having a second adult to keep passengers from becoming unruly or wearing seatbelts. Does the person or organization borrowing your vehicle follow these rules, too?

4. What the vehicle transports – You may have kept the vehicle in pristine condition, and the person or organization you lend it to chooses to transport something hazardous, or hand out ice cream cones to a dozen children. Or, they may use the vehicle for deliveries or to provide a ride-sharing service, in which case a claim may not be covered.

5. How the vehicle is inspected and maintained – You may have a pre- and post-trip inspection checklist that your drivers follow, and certain maintenance items they routinely perform. When you lend the vehicle to another person or organization, they may not follow these steps, increasing the potential for something to go awry.

6. Where the vehicle is driven – Driving off-road could cause damage to your vehicle. Additionally, if the borrower drives the vehicle into Canada or Mexico, that may not be covered in your automobile insurance policy. Driving beyond a 100-mile radius of your location could cause an increase in your premium.

7. How well you adhere to insurance requirements – Many state and federal motor carrier laws have special insurance and licensing requirements you must follow. When you turn the keys over to another person or organization, you lose control over how those requirements are followed, which may result in fines or having your vehicle impounded (and their passengers stranded).

Additionally, if your vehicle is involved in an accident while on loan to another organization, they may not have sufficient coverage or the claim could be denied, leaving your organization directly responsible for damages and legal expenses.

You may choose to lend your vehicle along with a driver for that vehicle. While providing your own driver would address many of the concerns above, it could also raise additional concerns, including:

• How often this situation occurs – Lending your vehicle with a driver once a year is different than lending your vehicle with a driver more frequently.

• If a written contract is used – A written contract is useful for many situations in which you want to transfer risk to another organization. But it can also transfer risks to you that your automobile insurance policy does not cover, which would make you directly responsible for those expenses.

• If payment is received – Transporting others for a fee could be seen as providing a “for-hire livery service,” which may not be covered under your automobile insurance policy. Dependent on state or federal requirements, that may subject transportation of people to motor carrier regulations and insurance requirements.

Lending your owned and insured auto to someone can be fraught with negative implications, so it’s important to speak with your insurance broker or representative about the intended use before you lend your vehicle out.

It may be wise to investigate bus and van rental organizations in your local community and the availability of transportation network companies (such as Uber or Lyft), so you can refer a friend and soften the “no” when they ask to borrow your vehicle.

For more risk management tips, information and resources, visit churchmutual.com/safety.