The Scenario: Imagine you are a masonry contractor with a business van, and your most recent project mandates a $1 million insurance limit on that vehicle. Your commercial auto insurance policy covers your van while an employee is driving it. But what happens if that employee needs to go to a supply yard using a ride-sharing service like Uber or Lyft, or uses their own car and then gets involved in an accident that causes minor injuries? Your standard commercial auto insurance will not protect your business or the employee in such situations.
In instances like the above, you’ll need a specialized form of insurance called “Hired and Non-Owned Auto Insurance.” This policy is designed to cover vehicles that your business neither owns nor operates, such as an employee’s personal car or even a taxi. The coverage also extends to certain businesses like real estate firms, insurance agencies, or legal practices that might arrange transportation for their clients.
If one of your employees gets into an accident while driving to a supply yard in their personal car, the hired and non-owned policy would come into play. Although the employee should have their own auto insurance, the costs are subrogated back to your company’s insurance because the driving was done at your request.
(Subrogation refers to the legal process where one insurance company seeks reimbursement from another. In this context, your employee’s auto insurer would seek payment from your business’ insurer for the claims they’ve settled.)
This type of insurance is targeted at business owners who depend on vehicles for business operations. This category includes contractors, home inspectors, sales representatives who travel, and especially food delivery services. Many restaurants don’t usually have coverage for non-owned vehicles, making this insurance a must-have. While your employees should have their personal auto insurance, these policies will subrogate costs back to your hired and non-owned coverage in the event of a work-related accident.
Options for Coverage: Hired and non-owned auto insurance can sometimes be added as an endorsement to your existing general liability policy, depending on the nature of your business. For instance, a retail clothing store with occasional deliveries could include it as an endorsement. However, in riskier industries like construction or food delivery, a standalone policy is usually required due to the elevated risk.
Coverage Limits: It’s advisable to secure at least $1 million in coverage annually. You might also want to consider purchasing Excess Liability insurance, which is often a prerequisite for certain contracts in construction and other industries.
Even if your business doesn’t operate vehicles, you may still be required to have auto insurance coverage of $1 million due to contract stipulations. In this case, you have two options:
If your business owns vehicles or asks employees to use their own cars for work, standard commercial auto insurance is not sufficient. Hired and non-owned auto insurance can fill the gaps, providing critical protection against various liabilities and financial challenges.
Not all business owners require commercial auto insurance, but there are instances where you may need insurance for hired and non-owned vehicles. This type of coverage is essential for situations where someone is driving a vehicle on behalf of your business.
Instead of attempting to determine if this insurance is necessary for your situation, it’s advisable to consult with a qualified insurance agent. They can assist you in identifying potential risks and coverage gaps you might not have considered on your own.
