A non owned auto is one that is not owned by the sports or recreation organization, but is instead owned by a staff member (employee or volunteer) or borrowed from an organization such as a church. When these non owned autos are involved in an accident while on association business: the following parties can normally be sued: the owner of the vehicle, the driver, and any organization for whose purpose the errand is being run. In other words, the sports organization can be sued for their vicarious liability of their staff member.

Its important to note that Non Owned Auto Liability insurance does not cover the driver or damage to the vehicle. It only covers the association that is the named insured on the policy. The driver will have to rely on his or her own Personal Auto Insurance Policy to provide liability and physical damage protection.

I just came across some excellent loss control material from Philadelphia Insurance Company on the topic of controlling the Non Owned Auto Liability risk in the sports and recreation context. This exposure represents an infrequent, but high severity risk where damages can easily exceed $1,000,000. The insurance carriers that insure sports and recreation organizations are very concerned about this exposure because its difficult to collect the proper premium for a low frequency – high severity risk. Sports organizations need to take this risk very seriously and implement the recommended controls.

Here are some links that you will want to check out:

Case studies on actual Non Owned Auto Liability losses in the non profit association context where damages exceeded $1,000,000: http://image.exct.net/lib/fecd15717367027c/m/1/InvestigationForm2.24.10.pdf

Personal vehicle usage precautions: http://image.exct.net/lib/fecd15717367027c/m/1/Employee-Volunteer.Use.of.PersonalVehicles2.19.10.pdf

Driver eligibility criteria: http://image.exct.net/lib/fecd15717367027c/m/1/Driver+Eligibilty_4400.pdf

Driver training and motivation: http://image.exct.net/lib/fecd15717367027c/m/1/Driver+Training+and+Motivation_2200.pdf

Source: Philadelphia Insurance Company, Hired And Non Owned Automobiles, Large Loss Lessons Learned

“Hundreds of tractor-trailer and bus companies ordered to shut down because of federal safety violations ranging from suspended licenses to possible drug use have stayed on the road by using different names, investigators say.”

 “The GAO report found that at least 20 of the roughly 220 commercial bus companies that had been fined and ordered out of service in 2007 and 2008 by federal regulators evade compliance by setting up shop under a new name…”

 This is a follow up to a prior blog posting entitled “Athletes At Risk While Transported By Charter Buses” which exposed the dangers and possible liability risks of hiring a service without checking out their background. 

 Source: http://www.msnbc.msn.com/id/32213170/ns/us_news-life/

Most athletic department administrators hire charter buses on the basis of price and availability and have never paid any attention to the safety record. However, experts recommend that safety record be given top billing. All athletic departments should refer to The Federal Motor Carrier Safety Administration website at  http://www.fmcsa.dot.gov/ and click on “search company safety records”.  The safety record of a charter bus service can be referenced if you know their DOT number.

An “Outside The Lines” study for the time period 2007-2008 found that almost one-third of NCAA Division I schools used charter bus services that had one or more deficiencies on federal safety scores. Of these 85 schools, approximately 35 used companies with an overall safety rating of “conditional” which is one step under “satisfactory”. The U.S. DOT ratings range from “satisfactory” to “conditional” to “unsatisfactory”. These ratings are issued based on drug testing, record books, bus maintenance, and driver qualifications. It is recommended that a charter bus service should not be hired unless it has a rating of “satisfactory”.

Another commonly used test of safety is the SafeStat score which keys in on both drivers and vehicles based on tickets, accidents, and violations found during road side inspections. A score 75 of above is considered to be deficient.

Examples of common safety violations which raise “red flags” include reports of crashes, driver violations, worn tires, unqualified drivers, failure to record entries in logbooks, driving without adequate rest, allowing drivers to drive prior to passing drug tests, and inoperable emergency exits.

It is my opinion that potential legal liability exists for athletic departments that subcontract out their transportation to charter bus services without first checking their safety record to verify adequacy.

John Sadler

See Full Article: ESPN, “Outside The Lines”, Paula Lavigne, http://sports.espn.go.com/espn/otl/news/story?id=3997988