Connect the policy to actual vehicle use
Hired and non-owned auto (HNOA) coverage can help address the business's liability when it uses vehicles it does not own. Hired autos commonly include short-term rentals and certain leased or borrowed vehicles. Non-owned autos commonly include employees' personal vehicles used for errands, sales calls, deliveries, banking, site visits, or other company business. HNOA is not a substitute for the vehicle owner's insurance and does not automatically cover physical damage to the vehicle being driven.
Two vehicle sources, one important business exposure
Hired Auto
Vehicles the business rents, leases, hires, or borrows may create hired-auto liability. Rental contracts and the need for physical-damage protection require separate review.
Non-Owned Auto
Employee, officer, volunteer, or other personal vehicles used for company work may create non-owned-auto liability even when the business owns no vehicles.
What HNOA May Address
Subject to the policy, HNOA can help protect the business against covered liability arising from qualifying use of hired or non-owned vehicles.
What Needs Separate Review
Damage to the used vehicle, employee injuries, transported property, contractual obligations, umbrella limits, and the vehicle owner's insurance do not automatically follow from HNOA.
Risks to review
- Employees using personal vehicles for errands, sales calls, deliveries, banking, or site visits
- Short-term rental cars, rented vans or trucks, borrowed vehicles, and temporary replacements
- Volunteers, officers, or other authorized people driving on behalf of the organization
- Personal auto policies with insufficient limits, business-use restrictions, exclusions, or lapses
- Rental agreements that transfer responsibility for physical damage, loss of use, towing, fees, or diminished value
- Out-of-state travel, unfamiliar vehicles, and inconsistent driver approval or insurance-verification practices
Information to prepare
- Who drives for the business, why they drive, and whether they are employees, officers, volunteers, or contractors
- Frequency, annual mileage, territories, destinations, passengers, goods carried, and vehicle types
- Personal-vehicle reimbursement practices and minimum employee auto-liability limits
- Driver approval, license and motor-vehicle-record review, proof-of-insurance, and renewal procedures
- Rental companies, rental frequency, annual rental cost, vehicle classes, payment methods, and insurance elections
- Contracts, requested limits, umbrella requirements, prior incidents, and any hired-auto physical-damage needs
Frequently asked questions
What is a hired auto?
A hired auto is generally a vehicle the business rents, leases, hires, or borrows, subject to the policy's definitions and exclusions. Long-term leases, vehicles rented or borrowed from employees, and certain other arrangements may be treated differently and should be reviewed.
What is a non-owned auto?
A non-owned auto is generally a vehicle the business does not own, lease, hire, rent, or borrow but that is used in connection with its operations. A common example is an employee's personal car used for a company errand.
Does HNOA cover an employee's personal vehicle?
HNOA generally addresses covered liability of the business arising from qualifying use. It does not replace the employee's personal auto policy and ordinarily does not pay for physical damage to the employee's car.
Does HNOA cover damage to a rented vehicle?
Not automatically. Liability to other people and physical damage to the rented vehicle are different exposures. Hired-auto physical damage, rental-agreement obligations, loss of use, towing, administrative fees, and diminished value should be evaluated separately.
Does the driver's personal auto insurance pay first?
For many non-owned-auto claims, the vehicle owner's policy may respond before the business's HNOA coverage, but priority and contribution depend on the policies, facts, contracts, and jurisdiction. The actual policy language controls.
Does a business need HNOA if it owns no vehicles?
It may. A business can have auto liability exposure when employees, owners, volunteers, or others use personal or rented vehicles for company work even when the business owns no autos.
Coverage descriptions are general. Availability, eligibility, limits, deductibles, exclusions, and policy terms vary by vehicle, driver, operation, jurisdiction, and insurance market. Actual policy documents control.