Regardless of the industry you operate in, it’s likely your employees need to operate vehicles for tasks like client visits, product deliveries and product pickups. While larger organizations often provide insured company vehicles to their staff for daily use, small and medium-sized businesses often don’t have that luxury.

If employees use personal vehicles for business-related activities and get into an accident, your organization could be held liable. That’s why it’s critical to have non-owned auto liability insurance, which can provide the following benefits:

A response for liability claims. If employees get into an accident while using their own or a rented vehicle for business purposes non-owned auto liability policies transfer the risks to your insurer. However. it’s important to remember that t his coverage protects your business and not the employee driving the vehicle.

Legal cost reimbursement. If your employees get into an accident and you are sued. legal costs can add up quickly. Non-owned auto liability polices help organizations cover legal expenses following a claim.

Protection that accounts for employees of all statuses. Hired and non-owned auto liability policies can provide coverage for all of your staff. regard less if they are full-time. part-time or temporary employees. This is particularly useful for organizations that hire additional staff during busy periods.

Coverage beyond basic policies. If your organization allows employees to use personal vehicles for work. chances are your general liability and auto policies offer insufficient protection. Non-owned auto insurance offers unique coverage often excluded in standard policies. ensuring your organization isn’t held accountable following an accident.

Flexibility. Without non-owned auto coverage. your organization is limited to providing insured company vehicles
to employees. However. with the right policy, your organization can allow staff to rent cars on business trips or use
personal vehicles for work.

Understanding Non-owned and Hired Automobile Liability Coverage

Does your business have potential automobile loss exposures that you are not aware of? You’ve taken all of the necessary steps to ensure that your own fleet operation is properly covered in the event of an accident. But what about the potential loss that arises from individual employees who operate their own personal vehicles for company business? There are many situations that present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles:

  • Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
  • Do you occasionally send an employee to pick up a visiting client at the airport?
  • Have you sent employees to pick up lunch, drop off mail or pick up office supplies?
  • Have you ever rented a vehicle while on a business trip?
  • Do you have a sales force to which you provide a car allowance for business use of their personal vehicles?

If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business. Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable.

Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using their own vehicle on company business. However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage you may be vulnerable to a potentially costly exposure.

Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.

Non-owned and Hired Automobile Coverage:

The Basics

Here are the first things you need to know about non-owned and hired automobile coverage:

Who needs non-owned and hired automobile coverage?

If you or your employees ever drive vehicles not owned by your business for business purposes, then you need non-owned and hired automobile coverage.

What is non-owned automobile coverage?

Non-owned automobile insurance provides liability protection when an employee occasionally has to drive his or her personally owned vehicle for business purposes. It assumes that the vehicle is not owned, registered or contracted in your name or on your behalf.

What is hired automobile coverage?

Hired automobile insurance provides liability protection when you or an employee is driving a rented, hired or borrowed vehicle.

Next Steps

If you do not already have this type of coverage and your employees occasionally use their own vehicles for business purposes—even quick errands—consider adding it to your business insurance package today. Consult with Magnolia Insurance Group to review your business automobile and general liability policies to ensure you have adequate coverage and liability limits for non-owned and hired automobiles.

Why Do I Need…Non-owner Auto Insurance?

Jordan lives in Chicago, a city with great public transportation, so he does not own a car. But once every few months, he borrows his friend Alex’s car to drive to the nearest warehouse club store to stock up on necessities. He tends to buy a lot of stuff, and borrowing Alex’s car instead of trying to take his purchases home on the train is much easier.

While driving back to his apartment after one of his shopping trips, Jordan became distracted, failed to stop at a stop sign and rear-ended the driver in front of him. The other driver suffered damage to her car as well as neck injuries.

Jordan called Alex right away to tell him what happened. Alex was upset, but Jordan told him not to worry—he had just recently purchased a non-owner auto insurance policy.

Jordan had been borrowing his friend’s car so often, he thought it was a good idea to protect himself in case of an accident. Alex was relieved, since the damages Jordan caused in the accident exceeded the limits of Alex’s liability coverage. Jordan’s non-owner policy covered the extra costs.

If you do not own a car but frequently borrow other people’s cars, rent cars or use a car-sharing service, non-owner auto insurance offers you coverage if you cause an accident.

This type of insurance covers you for damage you cause to someone else’s car in an accident. It also covers liability for injuries to the occupants of the other car or to pedestrians.

You should also consider the coverage if you do not currently own a car but will in the future. Having continuous insurance coverage will help keep your premiums low when you get a new car and purchase a policy for it.