Is Non-Owned Auto Insurance Really Important For You?

TLDR: This article explains hired and non-owned auto insurance, how it differs from other types of auto insurance, and why your company may need it.

Many businesses use vehicles to transport goods and run errands. Employees either use their own vehicles or ones provided by the company for such tasks. For example, your employee might have to deliver a package for the business. Let’s say they get into an accident on the way.

If the employee is driving a company-owned vehicle, your commercial auto insurance will provide coverage for vehicle damage and injuries. But what happens if they were using their own vehicle? Then your business will be held responsible for all the related losses.

That’s because personal auto insurance policies don’t provide coverage for vehicles used for business purposes. And commercial auto insurance only provides coverage for vehicles owned by a business. What to do?

Hired & Non-Owned Auto Insurance to the Rescue

Hired and non-owned auto insurance is what you need to cover vehicles used but not owned by a business.

Vehicles borrowed, leased, rented, or employees’ personal vehicles fall under this category.

As the name implies, this is a combination of two separate policies, hired auto insurance, and non-owned auto insurance. These policies provide coverage against similar exposures and risks.

What Does It Cover?

The policy generally covers property damage, bodily injuries, and legal costs. Businesses stay protected from any financial losses or liabilities that result from accidents involving an unowned vehicle.
As per Insurance Business America, the policy typically covers settlements, attorney and other court fees if the business faces lawsuits for an accident.

Keep in mind that hired auto insurance only covers third-party injuries, vehicle and property damage. If your employee has an accident and is at fault, then they themselves are responsible for their vehicle and should be covered by their personal auto insurance.

Why Do You Need Hired & Non-Owned Auto Insurance?

Because accidents happen. Car accidents certainly do, anyway. The NHTSA stated that in the first half of 2022 there were 20,070 vehicle crashes in the United States. As a business owner, you or your employees can get distracted while driving. Thus, you would need this policy if you utilize vehicles that you do not own. Additionally, even if you have a business owners policy (BOP), it probably doesn’t include hired auto coverage.

If your business uses vehicles it doesn’t own with any regularity; then this policy is a must. It could include activities such as delivering goods to and from the office, buying office supplies, or going to a meeting with a client. If an employee taking care of any business errands while driving their own car has an accident, then your business is liable without coverage.

According to the Bureau of Labor Statistics, in 2021 there were 1253 fatal accidents involving a work vehicle. Such crash numbers can prove to be costly for both the employee and the employer. Purchasing hired and non-owned auto insurance helps mitigate any losses from these common occurrences.

If your business lacks this auto insurance, it can pose a real liability issue. Unprepared small and medium-sized businesses can face expensive lawsuits. Having this policy in place protects your business and keeps the threat of financial loss at bay.

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