Hired and Non-Owned Auto Insurance Explained

Hired and Non-Owned Auto Insurance is coverage that business owners can purchase to protect themselves financially from damages caused by vehicles that they do not own, but which are used for business purposes.

This coverage provides liability protection for property damage or bodily injury to third parties involved in an auto accident with someone from your company driving a hired or non-owned auto.

HNOA can be purchased as a stand-alone policy or added as an endorsement to a commercial general liability policy.

What is Hired and Non-owned Auto Coverage?

Consider this scenario:

You ask your administrative assistant to pick up lunch at a local restaurant for an important business meeting. On the way back from the restaurant, they lose control of their vehicle, hitting a pedestrian and a parked car. Their auto insurance has lapsed.

Could your business be liable?

The simple answer is yes.

This is why it’s important to understand the different types of auto insurance coverages that are available and how they apply to your business.

Businesses use vehicles in many ways, whether it be driving a company-owned delivery van, renting a vehicle while on a business trip, or employees using their own car in the course and scope of their job.

It’s important to note Hired and Non-Owned Auto Coverage does not provide coverage for accidents that occur while an employee is commuting to or from work or while running personal errands. In most cases, it only provides liability coverage, meaning the insurance does not provide protection for any damage to the hired or non-owned vehicle involved in the accident.

In insurance policies, these different usage scenarios are specifically defined and affect coverage.

Vehicle Classifications

As used by insurers:

Owned autos – owned vehicles are vehicles that are owned by your business and are the most straightforward to cover.

Hired autos – hired autos are vehicles that are rented, borrowed, or hired. For example, if you are on a business trip and you rent a vehicle, this would be considered a hired auto.

Non-owned autos – non-owned autos are vehicles that are used in the business by an employee that do not belong to the business. For example, if an employee uses their own vehicle to run errands, their car is considered a non-owned auto.

Your business may benefit from reviewing your current coverage if you use hired or non-owned vehicles.

Coverage is offered on a secondary basis

It’s also important to keep in mind that with Hired and Non-Owned Auto Coverage insurance policy, other coverage would apply first.

For example, if an employee were driving their vehicle to the post office, coverage under their personal auto policy would apply first. If the employee doesn’t have coverage or the policy limits are not sufficient for the claim, the HNOA policy would then apply.

Hired and Non-owned Auto Coverage for Tech Consultants

Many contracts tech consultants enter into often require proof of adequate auto insurance, including coverage for hired and non-owned autos.

Conclusion

As you think about your business, consider if your business has hired or non-owned auto exposures. Do your employees ever use their own cars to do their job? Does anyone in the company rent vehicles while on business trips? Do you ever find you need to rent a vehicle to make a delivery to a customer?

There are many considerations when it comes to insuring your consulting business. Many of our clients are often surprised by how affordably they can get the coverage they need so their personal assets are not put at risk. Contact us today so we can help you determine if the coverages you currently have provide the protection you need.

This article is for general information purposes only. It is not insurance, tax, legal, business, or other advice. For specific insurance questions related to you or your business, please review your policy and contact our office.