Let’s say you need to drop off some paperwork to your lawyer, so you ask one of your employees to do it for you. Your employee drives their car to the office, and on their way back, they get into an accident. If they don’t have their personal car insurance, your business could be held liable.
This is one of the reasons why business owners should make sure that all the vehicles they or their employees use for business purposes are protected against potential accidents. In short, any hired and non-owned auto incident can cause multiple financial setbacks for a business.
For example, if one of your vehicles is responsible for hitting another, you may be responsible for damaging the other vehicle. You should also consider injuries to the other passengers. The passenger could be you, your employees, or people in another vehicle involved in the accident.
Luckily, there is a solution that can protect you, your people, and your assets against unwanted outcomes. Here’s what you need to know about hired and non-owned auto insurance and what it can do for your business.
What is Hired and Non-Owned Auto Insurance?
To explain what differentiates hired auto coverage from non-owned auto coverage, let’s first explain what hired and non-owned vehicles are.
Unlike commercial vehicles that a business owns to meet clients or transport equipment, products, or raw materials, many companies use vehicles they don’t own in their daily operations. These vehicles can be rental (hired) or vehicles owned by employees (non-owned).
- Hired Auto: Vehicles you lease, hire, or rent for your business purposes.
- Non-Owned Auto: Vehicles owned by employees and used for the purposes of your company.
Hired and non-owned auto insurance policies insure vehicles from both categories and the passengers inside. Both types of auto insurance protect you and your employees against many dangers and risks, including any damages to the vehicle or bodily injuries to any of the passengers that occurred during the accident.
What Does Hired and Non-Owned Auto Insurance Cover?
Hired and non-owned auto insurance cover property damage and injuries that happened while you or your employees were driving for work.
Here’s how they work separately:
Hired Auto Coverage
Let’s say a business rents a car for a salesperson who works at their company and needs a vehicle to travel to another city to attend an important business meeting. In case there is property damage, or they get hurt in an accident, hired automobile coverage can help you cover the costs if the other party files a lawsuit against your business following the accident.
Non-Owned Auto Coverage
Suppose an administrative worker used a personal vehicle for business purposes and got into an accident. While laws vary from state to state, the employer is responsible if the employee caused the accident, and the cause of the accident was negligence.
In this case, non-owned auto coverage could apply only after the employee’s personal auto insurance expires. That said, if you are using your employees’ personal vehicles for business purposes, you should make sure that the employees have appropriate coverage limits on their personal insurance.
General Liability Coverage
Usually, hired and non-owned auto insurance is an addition to a general liability policy. This policy excludes coverage for commercial vehicles (owned by the company) as these vehicles should already have full commercial auto insurance that covers damages to another driver’s vehicle, medical expenses for injuries, and physical damages to the property.
Do I Need Hired and Non-Owned Auto Insurance?
If you and your employees operate vehicles for business reasons, you should consider having insurance. Accidents are unpredictable and depend on many factors that you can’t control.
Additionally, you could be found negligent in some of these situations, including:
- An employee’s vehicle is not properly maintained.
- An employee’s insurance has expired.
- An employee’s driving record is below the standard required by the state.
- Your business doesn’t have any policies to handle the potential issues with vehicles they are using for business reasons.
As a business owner, you may have a basic policy that covers yourself. However, it would be best to consider having appropriate insurance for your employees and other passengers.
Having appropriate insurance is especially important to consider if your employees use company vehicles to finish tasks and run business-related errands. If employees are using your or the company’s vehicle, it is a good idea to cover them in case they are ever involved in an incident.
Furthermore, if you have rented a car for yourself or your employees, you will probably want to make sure you have proper coverage for the vehicle, the driver, and the passengers. In this case, coverage means that the insurance will pay for any damages to the hired and non-owned vehicles involved in the crash. And let’s not forget about the damages to another vehicle involved in the accident and its passengers — hired and non-owned auto insurance would come in handy in this case as well.
What Does Hired and Non-Owned Auto Insurance Not Cover?
Hired and non-owned auto insurance will not cover the vehicle or the passengers involved in an accident in case either a hired or a non-owned vehicle was used for personal instead of business purposes.
How Much Does Hired and Non-Owned Auto Insurance Cost?
Various factors can impact the price of an insurance policy that covers both hired and non-owned auto vehicles. Some of these factors include the age of a driver, their driving record, and the type of vehicles you use.
For example, hired and non-owned auto insurance will cost more for companies that hire young employees with poor driving records.
Generally, because commercial vehicles have higher liabilities, hired and non-owned auto insurance usually costs more than personal auto insurance and about the same as commercial auto insurance.
However, when deciding on what insurance to purchase, you should ensure that coverage is based on the demographics of the employees who will drive these vehicles. Another factor to consider is whether you and your employees will drive vehicles locally, internationally, or both.
Specific industry risks can also affect the cost of the insurance. For example, hired and non-owned auto insurance will cost more if you use vehicles to transport heavy machinery than vehicles used for basic transportation needs. The cost of the insurance policy varies greatly depending on the specific situation each company finds itself in.
Do Small Businesses Need Hired and Non-Owned Auto Insurance?
If you or your employees are using personal vehicles for work, your personal auto insurance policy may not cover you in all the risky situations we mentioned.
Usually, personal auto insurance policies exclude businesses driving from their coverage. That means you would be responsible for expenses if you get into an accident while driving for work.
Finally, hired and non-owned auto insurance is something all business owners who use vehicles for work should think about. If it’s important to you to have peace of mind when it comes to unpredictable accidents and potential additional expenses, this type of insurance can provide the coverage you and your employees need daily.
Do you have any questions about getting auto insurance? Feel free to contact our insurance specialists anytime — we’re here to help you make the best decision for your specific situation!