What is Hired and Non-Owned Auto Coverage for a Business Owners Policy?

April 26, 2024 | Business Owner Policy (BOP)

This article was originally published July 22, 2021

Hired and non-owned auto coverage is an add-on for a business owners policy (BOP) or a general liability insurance policy that provides liability protection when you or an employee is using a rented, hired, or borrowed vehicle for business purposes. Let’s say an employee is making deliveries in their own car and is involved in an accident. This type of insurance can be essential, as it protects your company’s finances if someone sues over the incident. (Note: It’s for liability purposes and doesn’t cover damage to the employee’s vehicle.)

Another example is that many businesses rent trucks when they need to make large deliveries. If your employee is driving a rented truck, causes an accident, and the other driver involved in the collision sues your company for the cost of their medical bills, a hired and non-owned automobile liability add-on can protect you.

Get a Quotechevron_right

Delivery person checking schedule

Does an Employee’s Personal Auto Policy Cover Them While They Drive for Work?

Your employees likely have coverage (and should have coverage) for their personal vehicles. But does their auto insurance cover incidents that occur while driving the vehicle for activities like making deliveries or transporting passengers for a fee? If it doesn’t, that’s a big vulnerability for your business. 

Hired and non-owned auto coverage is crucial in this type of scenario.

The Benefit of Adding Vehicle Coverage to Property and Liability Insurance

A business owners policy is also called property and liability insurance. Adding hired and non-owned automobile liability coverage to your policy can be to your advantage, as it means you don’t have to have a separate commercial auto policy for this purpose. More coverage with fewer policies—it’s a true win-win for your business. Plus, it may be more cost-effective to take this approach.

Does a Hired and Non-Owned Auto Liability Add-On Protect Drivers at all Times?

It’s important to know that a hired and non-owned auto coverage add-on only applies when a vehicle is being driven for work purposes. If a car is being used to commute to or from work or to run personal errands, for example, the policy doesn’t cover any incidents that occur.

My Employees Drive Company-Owned Vehicles. Are They Covered by My Business Owners Policy?

Hired and non-owned auto coverage for a business owners policy is specifically for vehicles that your business does not own. If your company owns vehicles that are used for business purposes, you need commercial auto insurance. It can cover a wide range of vehicles, including:

  • Cars
  • Limousines
  • Pickup trucks
  • Buses
  • Food trucks
  • Motorhomes
  • Truck tractors
  • Motorcycles
  • Emergency vehicles
  • Delivery/cargo vans
  • Tow trucks
  • Passenger vans
  • Box trucks
  • Flatbed trucks
  • Dump trucks
  • Dry van trailers
  • Refrigerated trailers

A commercial auto policy includes:

  • Bodily injury liability coverage. This coverage provides payment in cases of bodily injury or death resulting from an accident for which you are at fault. This may also include legal defense expenses depending on the type of policy purchased.
  • Property damage liability coverage. If your vehicle accidentally causes damage to another person’s vehicle or property, this coverage can protect you. That can include legal defense expenses depending on the type of policy purchased.
  • Medical payments, no-fault, or personal injury coverage. This coverage provides payment for any medical expenses that may arise due to an injury to an employee or a passenger traveling in your vehicle, regardless of who is at fault in an accident.
  • Uninsured motorist coverage. This coverage provides payment for any medical expenses, or in some cases property damage, that may have been caused by a hit-and-run driver or an uninsured driver. Underinsured motorist coverage (when the at-fault driver has insurance but not sufficient insurance to cover the damage caused) may also be included depending on the type of policy.
  • Comprehensive physical damage coverage. This is coverage for vehicles or trailers on your policy for damage caused to them other than a car accident. Examples include damage resulting from theft, vandalism, flood, fire, and other specified hazards.
  • Collision coverage. This is coverage for vehicles or trailers on your policy for damage caused to them by a collision with another vehicle or a single-car accident.

Who’s Responsible for Buying Your Company’s Hired and Non-Owned Auto Liability Coverage? 

As important as it is to your company’s financial protection, hired and non-owned auto liability coverage is still sometimes overlooked by businesses when they’re buying their policies. Why? Often, it’s because they think their commercial auto insurance policy has the coverage they need. But as explained above, it does not

If you’re a business owner, it’s crucial that you or someone on your team look into this type of coverage. Maybe you have an employee who serves as your “risk management” expert. If you do, they’ll understand how important hired and non-owned auto liability coverage is in mitigating risks from, for example, employees driving their own cars to pick up supplies at a store for your business. Accidents happen, so you need to be prepared! 

They’ll also have a good grasp of compliance considerations in the state and local community where you do business. You need to be sure you’re obeying the rules and regulations for your business type and how you use hired and non-owned vehicles. 

If you have someone advising you on your business strategy and their expertise includes insurance, you should talk with them about this type of coverage. They’ll know how important it is that you’re covered in this aspect of your business. 

We’ve all had experiences where the one item on our to-do list that we don’t take care of comes back to bite us! If buying hired and non-owned auto liability coverage is that one item you don’t address, the financial repercussions can be huge if an employee is involved in an accident.

Other Property Damage/Liability Policy Add-Ons

In addition to hired and non-owned automobile liability, you can enhance your property damage/liability policy with other add-ons as well. This includes:

  • check
    Cyber liability. This add-on insurance protects you in the event of an incident like a data breach regarding private customer, employee, or client information. It can also provide coverage for regulatory action defense if a government agency requires you to appear in court.
  • check
    Employment-related practices liability. This endorsement protects your business in case of a claim or lawsuit related to inappropriate workplace behavior (e.g., wrongful termination, harassment, or discrimination).
  • check
    Employee benefits liability. This add-on provides coverage in the event of errors or omissions in how you administer your employee benefits program. For example, it can protect you if you fail to add an employee to your medical insurance and the person is later denied coverage by the plan.
  • check
    Contractors installation, tools & equipment. This insurance covers your business's property, tools, equipment, etc. while at a job site, in transit, temporarily in storage, or during installation.
  • check
    Liquor liability. This add-on covers liability your business may incur from the selling, serving, or furnishing of alcoholic beverages.

Does it Matter Where I Purchase My Hired and Non-Owned Automobile Liability Add-On for My Business Owners Policy?

Many insurance companies can provide a hired and non-owned auto liability insurance add-on for a business owners policy. But thanks to our direct-to-you approach, biBERK can provide insurance for up to 20% less than other insurance companies.

Plus, we’re a business insurance company with reassuring credentials. We're part of Warren Buffett's Berkshire Hathaway Insurance Group with millions of satisfied customers, more than 75 years of insurance experience, and $38 billion in paid claims in 2020.

In addition, we enable you to get a fast, free quote on our website. It takes just minutes, and so does buying a hired and non-owned auto liability add-on online or reporting a claim.

So, yes, it matters where you get hired and non-owned auto liability insurance for your business. You can trust biBERK for business insurance made simple!

Get a Quotechevron_right