Does your company need Hired & Non-Owned Auto Insurance?

Hired and non-owned auto protects against lawsuits from accidents involving personal, rented, and leased vehicles used for work purposes. Many businesses use vehicles they do not own in their day-to-day operations. This includes rental vehicles (“hired”) as well as vehicles owned by their employees (“non-owned”). 

You can usually add Hired and non-owned auto as an endorsement to your general liability insurance or business owner’s policy (BOP).  Hired and non-owned auto insurance provides liability protection if a third-party sues your business for injuries or damage to their vehicle from the accident while you or an employee are operating a vehicle for your business. 

The Hired and non-owned auto covers:

• Bodily injury liability
• Property damage liability

Unlike commercial auto insurance, hired and non-owned auto insurance does not cover collision damage. You will need a separate policy for collision damage coverage. For a Hired Auto, the collision insurance (damage waiver) should always be purchased directly from the rental car company. For a Non-Owned vehicle, your employee’s auto insurance would provide the collision coverage for their own vehicle. Similarly, your personal insurance would provide collision coverage if you were driving for your business. 

However, if you or your employee are at fault for the accident, both you and your business would be liable for physical damage to the other vehicle and bodily injury to its passengers. Laws vary from state to state, but in general, if an employee is in the course of employment when the accident occurs and is negligent, the employer and employee are both liable.

Non-owned auto liability insurance is excess and comes into play after the employee’s personal auto insurance general liability limit is exhausted. Hired and non-owned auto is needed to protect the business because the employee’s insurance may have lapsed, or the employee may only carry the minimum limits required by the state and the amount of damages exceeds this limit.