Hired and Non-Owned Auto Insurance

Hired and non-owned auto insurance is a type of commercial auto liability coverage that protects a business from liability claims arising from accidents involving vehicles it does not own. This insurance is crucial for companies whose employees use their personal vehicles for business purposes or for businesses that rent or lease vehicles for work. It fills a critical gap in coverage, as a standard commercial auto policy only covers company-owned vehicles.

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Reasons for getting HNOA Insurance

It protects your business from liability when employees use their personal cars for work.

It provides coverage for accidents involving rented or leased vehicles used for business.

It helps a company avoid costly lawsuits and financial losses from accidents involving non-company vehicles.

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Who needs it?
Why do you need it?
What does it cover?
Frequently asked questions

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Home » Coverage » Hired and Non-Owned Auto Insurance

What Is Hired and Non-Owned Auto Insurance?

Hired and non-owned auto (HNOA) insurance is a specialized commercial auto policy that provides liability coverage for a business when its employees operate vehicles they do not own for company-related activities. This type of insurance is essential because an employee’s personal auto insurance policy may not provide adequate coverage, or any coverage at all, for an accident that occurs while they are using their vehicle for business purposes.

The “hired” portion of the policy covers vehicles a company rents, leases, or borrows, while the “non-owned” portion covers vehicles belonging to employees, contractors, or volunteers. This coverage is distinct from a business’s primary commercial auto policy. A standard commercial auto policy covers accidents involving vehicles listed on the policy, which are typically owned by the business. An HNOA policy, by contrast, is a liability-only policy that follows the business, not the vehicle. It provides a layer of protection that kicks in after the driver’s personal insurance has been exhausted or if it denies the claim due to the vehicle being used for commercial purposes.

For example, imagine a sales employee gets into a car accident while driving their personal vehicle to a client meeting. If the employee’s personal auto insurance company denies the claim because the accident occurred during a business activity, the Hired and Non-Owned Auto policy would provide liability coverage for the company, protecting it from a potential lawsuit.

Hired and Non-Owned Auto Coverage

Hired and non-owned auto insurance is a vital component of a company’s risk management strategy, especially for businesses with mobile employees or those that frequently rent vehicles. The coverage limits can vary, but it is typically a good practice to secure a limit that aligns with your company’s overall liability exposure.

Who Needs Hired and Non-Owned Auto Insurance Coverage?

The parties that can benefit from this coverage are diverse:

Businesses with Mobile Employees

Companies with salespeople, delivery drivers, or service technicians who use their own cars for work should have HNOA coverage.

Companies that Rent Vehicles

Businesses that rent cars for out-of-town trips or to transport equipment need HNOA to cover accidents involving those vehicles.

Organizations with Volunteers

Non-profits and other organizations that rely on volunteers who use their personal vehicles for company business should have this coverage.

Start-ups and Small Businesses

Small companies that don’t own a fleet of vehicles but have employees using their personal cars for company errands, such as making bank deposits or picking up supplies.

What Does Hired and Non-Owned Auto Insurance Cover?

While you’ll need to consult the specific policy documents to confirm your coverage, here are a few scenarios that are typically covered:

Third-Party Bodily Injury

Covers medical expenses and lost wages for a third party injured in an accident caused by an employee in a non-owned vehicle.

Third-Party Property Damage

Protects against the cost of repairing or replacing a third party’s property damaged in an accident.

Legal Defense Costs

Covers legal fees, court costs, and settlement amounts if your business is sued following an accident.

Hired and Non-Owned Auto Insurance Policy

A hired and non-owned auto policy covers:

Liability losses to a business from accidents involving non-company-owned vehicles.

Bodily injury and property damage claims from third parties.

Legal fees and costs associated with lawsuits resulting from an accident.

Gaps in an employee’s personal auto insurance when they are using their vehicle for business purposes.

How Can I Manage My HNOA Policy and Risks?

Managing an HNOA policy is crucial for businesses that don’t have a company fleet. A good strategy is to have a clear company policy on the use of personal vehicles for work, including driver qualifications and required personal auto insurance limits. This is also why a thorough audit of your business operations is the best way to secure a favorable policy.

This strategy includes a comprehensive review of how often employees use their personal vehicles for work, the types of tasks they perform, and the number of employees who do so. The more accurately you can assess these factors, the more easily you can determine the correct coverage amount, which is crucial for protecting your business. If an accident occurs, the HNOA policy will provide a vital layer of protection against financial ruin.

What Does an HNOA Policy Not Cover?

Like all insurance policies, a hired and non-owned auto policy has exclusions. For example, it doesn’t cover the following claims:

Physical Damage to the Hired or Non-Owned Vehicle: The policy does not cover damage to the vehicle itself, which would be covered by the driver’s personal policy or a separate physical damage policy for a hired vehicle.

Losses from Company-Owned Vehicles: The policy is specifically for non-owned vehicles and does not cover accidents involving company-owned vehicles.

Employee Injuries: The policy is a liability-only policy and does not cover injuries to the employee driving the vehicle. This would typically be covered by workers' compensation insurance.

Intentional Acts: The policy does not cover intentional acts, such as road rage or deliberately causing an accident.

Remember, a hired and non-owned auto policy focuses purely on protecting your business from liability when employees use their personal or rented vehicles for work.

Hired and Non-Owned Auto Insurance Cost

The cost of a hired and non-owned auto policy depends on several factors, including the number of employees who use their personal vehicles for work, the type of business, and the coverage limits. Premiums are typically a small fraction of a company’s overall insurance spend and are very affordable when compared to the potential cost of a lawsuit from an accident.

HNOA Insurance Cost Factors

Premiums are a function of the risk the insurance company is taking on, as well as the amount of coverage you require. Companies with strong driver policies and a low number of mobile employees will have lower rates than those with a large number of employees frequently on the road. How carriers determine premiums depends entirely on the specifics of the business, for example:

Number of Employees: The number of employees who use their personal vehicles for business purposes is a major factor.
Business Operations: The nature of your business and how frequently employees are on the road for work will impact the premium.
Industry: Certain industries, like construction or sales, may have higher rates due to the nature of their operations.
Prior Claims History: A history of claims can lead to higher premiums.

Additionally, many major insurers will customize a hired and non-owned auto policy, which impacts the premium. Some of the most prominent enhancements include:

Higher liability limits to cover a greater risk of potential lawsuits.
Broader definitions of a “non-owned auto” to include vehicles beyond just employee cars.

Hired and Non-Owned Auto Insurance Claim Examples

Delivery Driver Accident Sales Representative Meeting Volunteering Event

A small restaurant uses its employees to deliver food. One of the employees gets into an accident while on a delivery run. The HNOA policy would cover the liability costs for the restaurant if the driver’s personal insurance denies the claim.

A sales rep is driving their personal car to meet with a client when they are involved in a multi-car pileup. The HNOA policy would protect the business from a lawsuit from the other drivers.

A non-profit organization hosts an event, and a volunteer uses their personal truck to pick up supplies. The volunteer causes an accident, damaging another vehicle. The HNOA policy would provide liability coverage for the non-profit.

A sales rep is driving their personal car to meet with a client when they are involved in a multi-car pileup. The HNOA policy would protect the business from a lawsuit from the other drivers.

Insurance Brokers For Hired and Non-Owned Auto Insurance

Founder Shield is a data-driven insurance brokerage serving high-growth, innovative industries. We have a passion for creating and developing innovative risk management products across emerging industries and work hand in hand with clients and underwriters to ensure transparency, efficiency, and reliability every step of the way. Our team has specialized expertise and experience in providing hired and non-owned auto services.

We partner with the leading commercial auto insurance carriers to craft tailored risk management programs for public companies and venture-backed companies preparing for funding rounds. With hired and non-owned auto insurance a major budget item, we understand that companies look for new and creative solutions to help manage increasing costs while also securing best-in-class coverage.