Organizations and businesses often do not understand the significant exposure they have with Hired and Non-Owned Auto Liability.  Many believe that they do not need Commercial Auto coverage if they do not own vehicles. However, all business organizations have an exposure to loss when employees or volunteers use their own personal vehicles to drive on the business’s behalf.

Non-Owned & Hired Auto Liability 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).

It is routine for employees or volunteers to run errands, drive to the post office, and pick up supplies or lunch for a business organization.  Should an employee or volunteer have an accident and cause bodily injury or property damage to a third party, the business could be named in a lawsuit because the individual was driving on the business’ behalf.  While the individual’s own personal auto policy would be primary, it would not extend protection or coverage to the business if it is named in a lawsuit. 

Hired Auto and Non-Owned Auto coverages are usually added as endorsements on a General Liability policy. These types of coverage meet contract requirements for Commercial Auto coverage when the company has no vehicles titled in its name.

Also, Hired Auto coverage can either supplement or replace a car rental agency's liability coverage. But, because Hired Auto insurance doesn't cover physical damage to a rented vehicle, it still makes sense to purchase the rental agency's physical damage coverage. The Hired Auto policy's liability coverage protects only your company, not the employee driving the rented vehicle. As such, it supplements the driver's own auto liability coverage. Just as if he or she were driving a personal vehicle, in the event of an accident, the employee would still be personally liable for injuries or property damage to third parties.

The cost of Hired & Non-Owned Auto Liability coverage is minimal to address the exposures addressed above.  Lyman & Sheets would be happy to discuss your organization’s exposures and design a risk management plan that is responsive.

Peter Dewan is a licensed commercial insurance agent with Lyman & Sheets. He has more than 30 years of experience in the insurance, government and nonprofit industries and provides risk management counsel to many large nonprofit, cultural and public entity clients. Connect with Peter on LinkedIn or follow him on Twitter @PeterDewan.