Hall of Shame – Fellow Employee Exclusion in the Standard Auto Policy

Auto Accident About to Happen

This scenario represents an actual coverage issue in an insurance program of a well run, profitable business brought to light and altered by KMRD.

The following claims scenario was troublesome to the CEO and CFO:

  1. Key manager drives an employee using a company vehicle to a client’s office for a meeting.
  2. An auto accident occurs and the employee is seriously injured while in the passengers seat. Employee sues the key manager individually for his negligent driving. CFO reports the claim / lawsuit to the insurance carrier.
  3. Carrier refuses to cover the claim based on the following paragraph in the commercial auto policy:

“Fellow Employee
This insurance does not apply to …. “Bodily injury” to:
a. Any fellow “employee” of the “insured” arising out of and in the course of the fellow “employee’s” employment or while performing duties related to the conduct of your business; or
b. The spouse, child, parent, brother or sister of that fellow “employee” as a consequence of Paragraph a. above.”

The CFO had to tell the CEO there is no insurance coverage and his/her key manager’s personal assets are at stake because their insurance broker did not negotiate a commonly available enhancement to an auto policy for a company of their size.



A prospect’s auto policy included a standard exclusion removing coverage for claims made by one employee against another employee. This exclusion is commonly known in the industry as the “Fellow Employee Exclusion”.


Hire an insurance professional with a proven system ensuring every detail of a policy is reviewed and negotiated to meet the needs and concerns of the management team. This would not have been an issue if the broker remembered to ask the carrier to modify the policy to include fellow employee coverage for Executive Officers, Supervisors and other Key Employees.

KMRD’s database indicated this particular carrier made this endorsement regularly available for no additional cost.

How KMRD Can Help:

KMRD delivers risk management and human capital solutions to over 600 clients nationwide. Our award-winning team, disciplined approach, proven processes, combined with our risk management portal make KMRD the leading choice to improve business protection and reduce the overall cost of risk.


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