Hired and Non Owned Auto Insurance
Let’s say you’re a masonry contractor with a van and your latest work contract requires you to have a $1 million limit on your van.
Your insurance policy provides this coverage while your employee is driving your van. But let’s say one of your employees goes to the supply yard and in a cab or a ride-sharing car (Uber/Lyft). Or maybe you let them drive their own personal car, and they’re involved in an accident with some minor injuries.
A commercial automobile policy will not cover them or your business in these circumstances. So if your employee is driving their car, or if they’re riding in a rideshare vehicle, you need a special kind of auto insurance that’s usually done in addition to the regular commercial auto insurance.
It’s called Hired & Non Owned Insurance.
What is Hired and Non Owned Auto Insurance?
Hired and Non Owned auto insurance refers to any vehicle you hire or do not own or not owned by your business, such as an employee’s vehicle. Even the ride-share or taxicab your employee takes is a hired vehicle. It can also apply to businesses like real estate agencies, insurance companies, and attorneys who arrange for transportation of clients to another location. And it applies to employees who use their own vehicles for this purpose.
That means your non owned insurance covers the employee who has an accident driving to the supply yard in their vehicle. That employee still has his or her own personal auto insurance, but since they were driving at your request, those payments get subrogated back to your own insurance.
(Subrogation is a legal term that means one insurance company can pursue payment from another insurance company. In this case, the employee’s auto insurance provider would subrogate the payment back to your insurance provider for the fees they paid out.)
Who Needs Hired & Non Owned Auto Insurance Coverage?
Hired and non owned auto insurance is not for everyone. It’s basically for business owners who use vehicles for their business. That includes contractors, home inspectors, traveling salespeople, and restaurants that deliver.
This especially includes restaurants, which usually don’t have coverage for non owned vehicles. If your employees deliver food for you, you need hired and non owned auto insurance!
Yes, your employees must have their own auto insurance, but they still need hired and non owned insurance. If they’re involved in an accident while they work, their personal insurance will subrogate back to your own hired and non owned insurance. And if you don’t have it, that can be a problem.
Hired and non owned auto insurance can sometimes be an endorsement on your existing general liability insurance, but that depends on your industry. For example, if you own a retail clothing store that offers occasional delivery, you can get hired and non owned insurance as an endorsement. But if you own a construction company or anything food-related, hired and non owned cannot be endorsed onto the general liability because the risk is too high. In those cases, you can buy it as a standalone policy.
If you do purchase the insurance you can (and should) get up to $1 million per year, and even consider getting Excess Liability insurance, which is often required to satisfy different construction and employment contracts.
What If You Don’t Have a Vehicle?
Let’s say you’re working on a construction contract that requires you to have $1 million in auto insurance, but you don’t use a vehicle as part of your work. Bottom line, you’re still required to have it.
So you have two choices:
- You can either buy a $1 million policy and then buy a vehicle to register under the business name.
- You can buy a hired and non owned insurance policy for yourself. As long as you have $1 million in coverage, you’re in compliance on that contract.
The Big Takeaway
Companies that have vehicles, or require their employees to drive their own cars, will need something more than commercial auto insurance. Often, hired and non owned insurance can save you a lot of headaches and expensive emergencies. It can protect your business if you ever do anything more than drive your own vehicle for work.
Not every business owner needs commercial auto insurance, but there are times you will need hired and non owned auto insurance. You need to cover yourself for those occasions where somebody is using a vehicle on your behalf.
Rather than trying to figure out whether you need it, speak to a professional insurance agent. They help business owners cover the possibilities you might not think of yourself.