Many business owners use vehicles for work that are not owned by the business. If you rent, lease or borrow a vehicle for work, you can protect your business with hired and non-owned auto (HNOA) coverage, a type of commercial auto insurance. HNOA can also help cover auto accidents that happen while your employee is using their personal vehicle for business purposes, like making deliveries or meeting with clients.
HNOA can help cover claims if your business caused property damage or bodily injury to someone in an auto accident while driving a rented, leased or borrowed vehicle, or when your employee is using their personal vehicle for business purposes.
To help you understand exactly how this works, let’s talk through an example from a small business owner. Jenny owns a bakery and wants to treat her employees to lunch. Because she’s busy helping customers, she asks her assistant to pick up the lunch order for the team. While in route, her assistant gets into a fender bender with her personal vehicle, causing physical damage to the other driver’s car. Jenny gets sued. With hired and non-owned auto coverage added to her business auto policy, Jenny’s insurance can help cover the costs associated with the accident.
HNOA includes two different types of coverage:
- Hired coverage means your business has coverage when you or employees drive a rented, leased or borrowed car for business.
- Non-owned auto coverage applies to employees using their own cars for business. It provides extra coverage over the employee’s personal auto policy for bodily injury and property damage liability coverage.
What Are Considered Non-Owned Vehicles?
Non-owned vehicles are personal cars that your business doesn’t own or lease. Non-owned auto coverage helps provide liability protection if a vehicle you haven’t leased, hired or rented is driven for your business and is in an accident.
For example, if your employee drives a personal vehicle for work and rear ends another car, your non-owned auto coverage can help pay for damages to the other person’s vehicle if the costs exceed the employee’s personal auto coverage limits. And, if they sue your business for medical costs later, this coverage can also help your company pay for those expenses.
What Is Considered a Hired Auto?
The term “hired auto” refers to any vehicles that you hire, rent or borrow. To get coverage for these, you’ll need hired auto insurance, which applies to cars and trucks. So, if you or your employee are in a car accident while driving a hired, rented or borrowed vehicle for work, hired auto insurance can help pay for your liability costs.
What Does Hired and Non-Owned Vehicle Insurance Cover?
Hired and non-owned auto insurance helps provide coverages for:
- Bodily injury damage, which helps pay for medical costs, prescription medicine, lost income, funeral expenses and legal and settlement costs up to your policy’s liability limits.
- Property damage, which helps pay for vehicle repairs, legal and settlement expenses and replacement costs for damaged property.
What Is Not Covered by Hired and Non-Owned Auto Insurance?
Be aware that hired and non-owned auto insurance is a type of liability insurance for small businesses, but it does not cover injuries that happen to you or your staff would not be covered. It also means property damage to your business would not be covered.
Some examples of what would not be covered include:
- Property damage to your business’ hired or non-owned vehicle.
- Medical bills if you or your employee get hurt in an accident while using rented or personal vehicles.
- Property damage to your business.
- Damages or bodily injury from an accident while you or your employee drive for personal reasons that are not related to your business.
- Property stolen from the hired or non-owned vehicle.
- Normal wear and tear on a hired or non-owned vehicle.
Do You Need Hired and Non-Owned Auto Coverage?
If your business rents or borrows vehicles to do work, or if your employees use their personal vehicles for business, getting hired and non-owned auto coverage is important. It can help pay for any property damage that rented vehicles cause while being used for your business. It also covers vehicles used for your business if they cause bodily injury to another driver in a car accident. A business without insurance coverage may need to pay out of pocket for damages.
What Does Non-Owned Auto Coverage Cost?
The cost of your non-owned auto coverage will depend on factors like your:
- Claims history: If you’ve made non-owned auto coverage claims in the past, this could increase your premium now.
- Type of vehicle: Vehicles that have a higher value will increase your premium.
- Driving history: If your employees have a history of collisions this could increase your premium.
- Frequency of renting vehicles: The annual amount you spend on renting vehicles can affect what you pay for non-owned auto coverage.
