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Hired and Non-Owned Auto Coverage: What You Need to Know

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To avoid financial ruin, understanding the differences between hired and non-owned auto (HNOA) insurance is crucial. This specialized insurance is essential for businesses that use vehicles they don't own. Read on to learn more about hired and non-owned auto coverage, what it includes, and examples of how it can protect your business.

What Is Hired and Non-Owned Auto?

Hired and non-owned auto coverage is a type of commercial auto insurance that protects businesses when employees use vehicles that the business does not own. This includes rented, leased, or borrowed vehicles (hired autos) and employee-owned vehicles used for business purposes (non-owned autos). This coverage is particularly important for businesses that rely on transportation but do not own a fleet of vehicles.

What is Considered a Hired Auto?

A hired auto is any vehicle that a business rents, leases, or borrows for short-term use. This can include:

  • Rental Cars: Vehicles rented from a rental company for business trips or client visits.
  • Leased Vehicles: Vehicles leased for a specific period, typically under a contract.
  • Borrowed Vehicles: Vehicles borrowed from another company or individual for business use.

Hired auto coverage protects the business from liability in case of an accident involving these vehicles. It's important to note that this coverage usually applies to vehicles rented for 30 days or less.

What Does Non-Owned Auto Coverage Cover?

Non-owned auto coverage applies to vehicles that are owned by employees but used for business purposes. This type of coverage protects the business in situations where an employee is driving their own vehicle on behalf of the company. Key aspects of non-owned auto coverage include:

  • Liability Coverage: Protects the business from legal liability if an employee causes an accident while driving their personal vehicle for business purposes. It covers bodily injury and property damage to third parties.
  • Medical Payments: Covers medical expenses for injuries sustained by the employee or passengers in the employee's vehicle.
  • Uninsured/Underinsured Motorist Coverage: Protects the business if an employee is involved in an accident with a driver who has insufficient or no insurance.

Non-owned auto coverage is particularly useful for businesses that rely on employees to run errands, visit clients, or perform other tasks using their personal vehicles.

Examples of Hired and Non-Owned Auto Coverage

Understanding how hired and non-owned auto coverage works in real-world scenarios can help illustrate its importance:

Scenario 1: Business Trip with a Rental Car

Your marketing manager rents a car for a business trip. While driving to a client meeting, they rear-end another vehicle. The rented car's insurance does not fully cover the damages, leaving your business liable. Hired auto coverage steps in to cover the remaining costs, protecting your business from significant financial loss.

Scenario 2: Employee Using Personal Vehicle for Deliveries

Your employee uses their own car to deliver products to customers. While making a delivery, they accidentally hit a pedestrian. The employee's personal auto insurance has low liability limits that do not cover the full extent of the pedestrian's injuries. Non-owned auto coverage helps cover the excess liability, shielding your business from a potentially crippling lawsuit.

Scenario 3: Borrowed Vehicle for a Special Event

Your company borrows a van from a partner organization for a corporate event. An employee driving the van causes a multi-car accident. The borrowed vehicle’s insurance is insufficient to cover all the damages. Hired auto coverage fills in the gaps, ensuring your business is not held financially responsible.

Hired and non-owned auto coverage is an essential safeguard for businesses that use vehicles they do not own. It provides crucial liability protection in cases where rented, leased, or employee-owned vehicles are involved in accidents while being used for business purposes. By understanding what constitutes a hired auto, what non-owned auto coverage includes, and how these coverages work in practice, you can better protect your business from unexpected financial burdens.

Let us help you protect your business with HNOA insurance and keep your mind at ease. At Tivly, our goal is to help you find protection for your business as efficiently as possibly by matching you with the right insurance provider. Simply give us a call at 877-907-5267 or complete the form above and one of our specialists will contact you right away.

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