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.