If you have company vehicles or use your own vehicle for work purposes, you probably already have commercial auto insurance or a business auto policy (BAP). These policies are lifesavers when someone gets in a wreck.
But what if you don’t own the business vehicles your team uses for work? Will your commercial policy have your back?
That’s where a hired and non-owned auto (HNOA) insurance policy comes in handy. If your business uses rental vehicles or lets employees use their personal cars for work, it’s time to consider this unique liability-only protection.
Here’s everything you need to know about hired and non-owned auto insurance.
What Is Hired and Non-Owned Auto Insurance?
Hired and non-owned auto insurance is liability coverage for vehicles you’ve hired, rented, or borrowed for work purposes. It covers third-party claims, like damage to another person’s property. However, it won’t cover physical damage to your company vehicle or employee's car.
It also acts as a backup coverage if your employee uses their own car for work. If they’re in a crash while on the job and their personal car insurance reaches its liability limit, the other motorist will look to your business to cover the damages. So, it’s best to be ready!
Your insurance company might let you add non-owned auto coverage to your commercial auto policy, general liability policy, or business owners policy (BOP). You can also look into business auto policies. They’re super flexible, so you only need one policy to cover your small business’s personal, hired, and non-owned vehicles.
What’s the Difference Between Hired vs. Non-Owned Vehicles?
Hired autos are vehicles you rent for your business. Non-owned autos are your employees’ personal cars that they use for your company.
Hired and non-owned auto liability coverage protects you if a third party claims your rented vehicles or an employee’s personal vehicle caused a crash, as long as the cars or trucks were being used for business at the time. So, you’re covered if you regularly rent cars or trucks to move cargo or if your employee drives their own car to move equipment between job sites.
Can I Add an Additional Insured to My HNOA Policy?
Yes, you can extend your HNOA coverage to another person or business by adding them as an additional insured on your policy.
If your employee is using a personal vehicle for work, you may want to go the extra mile and ask them to list your company on their liability policy. The same goes for subcontractors.
Usually, subcontractors are covered by general liability if they cause damage to a third party, but their policy might exclude auto-related claims. If that’s the case, your subcontractor can make you an additional insured on its HNOA coverage.
What’s Covered by Hired and Non-Owned Auto Insurance?
Car accidents are not a one-and-done affair. After the fact, you could be looking at thousands of dollars in damages. An HNOA policy can help you pay for these hefty expenses. They typically cover:
- Property damage: If you hired a short-term rental truck to move equipment to a construction site, but it topples on the highway and damages another car, an HNOA policy helps pay for the other car’s repairs.
- Bodily injury and medical expenses: Your employee collides with another car while transporting pipes to a new worksite. They’re fine, but the other driver breaks their leg. Yikes, medical payments are expensive. But, with HNOA, you won’t have to pay completely out of pocket for their medication, physical therapy, or other medical bills.
- Legal fees: You get into a car wreck while you’re working and cross your fingers that it can be handled civilly, but life isn’t always that easy. HNOA helps you pay for attorney fees and settlements if the driver decides to take you to court. It’s important to remember that hired auto only covers your company if it’s sued, not your employees. They still need their own liability insurance.
What’s Not Covered by Hired and Non-Owned Auto Insurance?
A hired and non-owned auto policy does not cover damage to:
- Your rental vehicles
- Your employees’ vehicles
- Your goods and equipment
- Your injuries or those of your employees
So, you still need to rely on other types of business insurance, For example, HNOA can help if someone other than you or your employee is injured, but you’ll need workers’ compensation to cover medical payments for your employees.
While HNOA covers business activities, like depositing company funds at a bank, it won’t protect you or your employee from car accidents that happen during a commute to or from work or running personal errands, even if it’s during business hours.
And while HNOA covers rented vehicles, that doesn’t include the ones you’ve rented from people you work with, such as employees, business partners, or family members. And, for employee vehicles, HNOA is only offered “on-excess,” i.e. when their personal car insurance has been maxed out.
Keep in mind that you won’t receive coverage if you or your employees were negligent on the road. This could mean one of you:
- Was driving drunk
- Had a poorly maintained vehicle
- Was driving without personal car insurance
Your HNOA policy might also not provide coverage in an accident if the employee has a poor driving history, like DUIs or several infractions.
How Much Does Hired and Non-Owned Auto Insurance Cost?
You can find an HNOA policy for about $100 a year. How much you pay depends on factors like:
- Employee driving records
- Coverage limits and deductibles
- Prior claims from your business
- Type, value, and number of vehicles being insured
- Number of miles driven
These policies are often purchased as six-month policies, so you won’t have to commit to premiums for the whole year.
Your rental company might offer its own auto liability coverage with similar protection as an HNOA policy. You should look into different insurance rates to make sure you’re getting the most bang for your buck because rental car insurance can cost much more than HNOA insurance coverage.
Take On the Road with HNOA Insurance
You and your team are on the road a lot. There are things you can do to lower the risk of an accident and keep money in your pocket. You can create clear road safety requirements for your team, limit your drivers to employees with long, good driving records and make sure everyone carries an updated driver’s license.
Still, you need unique protection to manage your unique risks. If you don’t own your vehicles outright, HNOA coverage can help cut down on your liabilities if either you or your workers got into a car accident.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe