Hired and Non-Owned Auto Insurance
There are two types of companies that deal with vehicles. One is an organization that owns a fleet of cars, vans, or trucks. These are driven by employees who, through commercial auto insurance, are covered in the case of property damage or bodily injury.
The second type of company does not own the vehicles it works with. They’re owned or rented by the individuals driving them or some other company.
Lack of Commercial Coverage Through Personal Insurance
Though personal auto insurance covers individuals for normal driving, it doesn’t do so for commercial situations. Thus, if you got into an accident or injured another party while driving for business, the plaintiff could sue your company. This is why many businesses must purchase hired and non-owned auto insurance (HNOA) for protection.
How HNOA Works
Simply put, hired and non-owned auto insurance is a policy for small businesses that either rent or lease their vehicle fleet or ask their employees to drive their own vehicles for commercial services.
HNOA would handle coverage in the following instances:
An employee has an accident in a leased/rented vehicle or one they personally own that results in property damage or bodily harm.
Legal fees and reimbursements to other individuals and property owners who suffer damages related to an accident.
HNOA insurance doesn’t cover:
Accidents that occur while an employee is on their way to work in their own vehicle or one leased/rented by the company. The former gets handled by personal auto insurance while the latter receives coverage from a commercial auto policy.
Required repairs to the leased/owned vehicles or the employee’s personal vehicle. In some cases, this is handled by respective insurance policies. In other situations, it might require out-of-pocket payments.
Incidents that take place during the workday when an employee runs a personal errand.
Who Needs HNOA?
Hired and non-owned auto insurance is important for businesses that utilize vehicles for different situations. For instance, a company could have a fleet of leased vehicles that employees need for sales calls across the country. In another situation, they might require a vehicle for local deliveries or transportation services. For instance, a newspaper might hire people as district managers and ask them to drive around different neighborhoods to deliver missing papers.
HNOA insurance is also necessary for a real estate agency. That’s because the personal or leased vehicles driven by agents might also contain passengers. Should an accident take place, non-workers inside the car can sue the company.
Some insurers don’t sell HNOA insurance as a separate policy like they would with commercial auto. Instead, it’s embedded within a general liability policy. It can also be part of a general clause that’s built into a business owner’s policy (BOP).
Cost and Acceptance
The cost of an HNOA policy depends on the company’s size, the number of employees, and whether the vehicles are rented/leased or owned by workers. On top of this, insurers review a company’s credit history and prior claims to determine a premium value.
There are scenarios where an insurer might deny HNOA coverage to a company. An example would be if the company has the right rate of accident claims from a previous policy. A company could also be denied if it fails to show proper financial responsibility.