This is a fairly common issue, particularly for employees whose positions occasionally require them to use their personal vehicles for work-related purposes. The employee may be correct that her personal automobile insurance policy does not cover certain business-related activities. In Canada, personal auto insurance policies generally distinguish between personal use, commuting, and business use. Depending on the insurer and the nature and frequency of the work-related driving, an employee may need to notify their insurance provider and obtain an appropriate business-use endorsement or coverage. Picking up lunch, collecting supplies, or travelling to an off-site business meeting may be treated differently depending on the policy. The important thing is that the employee should not be expected to drive for work purposes if doing so would put her outside the coverage of her insurance policy.

From an employer’s perspective, I would recommend first asking the employee to confirm with her insurance provider exactly what coverage she currently has and what would be required to permit occasional work-related driving. It is also worth remembering that employees are not necessarily obligated to absorb additional insurance costs simply because their employer requires them to use their personal vehicles for work. If using a personal vehicle is an established requirement of the position, the employer should consider whether it is reasonable to reimburse the employee for any additional insurance premiums, in addition to providing mileage reimbursement for business travel.

For the Holiday Inn meeting specifically, I would not insist that she use her personal vehicle. There are several alternatives employers commonly use in these situations: provide access to a company vehicle, arrange a rental vehicle, reimburse reasonable taxi or rideshare expenses, or have another employee who is appropriately insured drive. If employees are regularly expected to travel for work, some employers maintain a company vehicle or establish a process for booking rental vehicles. I would also recommend speaking with your organization’s commercial insurance broker to confirm whether your business has non-owned automobile liability coverage. This coverage can help protect the employer if it is held liable for an accident involving an employee’s personal vehicle being used for company business; however, it does not replace the employee’s personal automobile insurance.

My recommendation would be to review the wording in her job description and establish a clear policy around work-related travel. If personal vehicle use is an occasional requirement, clarify whether employees are expected to maintain business-use coverage, whether the company will reimburse any additional premiums, and what alternatives are available when an employee cannot or does not wish to use their vehicle. You should also establish a mileage reimbursement process. For reference, the CRA’s 2026 reasonable automobile allowance rate is $0.73/km for the first 5,000 business kilometres and $0.67/km thereafter in Ontario.

Ultimately, I would approach this as an insurance and operational issue rather than an employee performance issue. Even if using a personal vehicle is listed in her job description, the company should ensure appropriate insurance arrangements are in place before requiring employees to drive for work. You should also ask yourself if your company currently has commercial vehicle insurance/non-owned automobile coverage, or if employees generally use their own vehicles without formal company insurance arrangements.

I hope this advice helps!
-HRInsider Staff