Understanding Hired/Non-Owned Commercial Auto Insurance

Business owners who allow their employees to drive as part of their assigned duties assume a degree of liability for the employees’ actions behind the wheel. Therefore, they need commercial auto insurance. Still, if an employee uses their personal car for work, then that does not mean that your liabilities go away. The employee still drives under the business’s authority at these times. So, if you are trying to insure this employee, then you will likely need to ensure your policy contains hired/non-owned auto insurance. Here’s how this coverage works and how it can benefit your business.  

Personal Vehicles Used for Business  
Many business owners use their personal cars in the regular course of their duties. Others allow their employees to drive their own cars in the course of business.  

For example, a sales rep might travel in their own car frequently to visit their clients. Realtors might use their personal cars to drive between properties. Or, you might hire someone to work as a delivery driver for your local pharmacy. Today, vehicles have become a regular feature of many businesses’ operational strategies.  

When someone drives on behalf of a business, they expose the business to liability risks. That’s because if this person has an accident, then the business might have to help pick up the pieces. This is especially true when a business driver is at fault for an accident that harms others. As a result, the third party might try to sue the business for their injuries or property damage costs. In these cases, the business’s commercial auto liability insurance can help compensate the affected driver for their damage costs.  

Because the driver was operating on behalf of the business at the time of the accident, then the business might have a responsibility to step in with their commercial auto insurance. So, the business owner will need to make sure their commercial auto policy covers someone driving a personal car. In this case, you might need to include hired/non-owned liability coverage on your policy.  

Understanding Hired/Non-Owned Coverage  
Hired & non-owned auto liability insurance is part of many commercial auto insurance policies. As its name suggests, it applies to vehicles that operate for a business, but that the business does not own. Under your policy:  

Non-owned insurance applies to vehicles like employee-owned cars when used for business.  

Hired auto coverage applies to vehicles the business hires. Rental vehicles usually fall under this coverage. Drivers whose services you hire for certain purposes also fall under this coverage.  

Sometimes, you can buy hired & non-owned vehicle coverage separately. However, it’s often simpler to buy them together. When setting up a commercial auto policy, you might need to ask your agent to add it onto your coverage. It might not automatically come with the policy. Also, sometimes, you can buy coverage as a standalone policy. Or, you might be able to add it to your general liability insurance policy instead.   

Keep in mind, hired/non-owned auto coverage does not apply to physical damage that the vehicle sustains in a wreck. Instead, it only applies to liability costs caused to other people who are not employed by your business. Therefore, it won’t pay your own driver for their vehicle’s damage.  

Also, just because your business has a non-owned liability policy, that doesn’t mean your employee driver still doesn’t need personal auto insurance. A hired/non-owned policy will not apply when the employee commutes to work or runs a personal errand during work hours. Therefore, they will need to maintain personal auto coverage on their own.  

To ensure that your employees have the appropriate coverage when using their personal vehicles for work, ask your agent to add them as a named insured party on your commercial auto coverage. You will ensure that hired/non-owned liability coverage always extends to them.