Your Business Isn't Protected Without This Coverage

16.05.22 01:38 PM By Craig Pina

Do your employees use their personal car for work?

When employees use their personal vehicle instead of a company owned vehicle, even if your business doesn't own any vehicles, may seem like its just simple common sense. Your company can be held partially liable for damages in the event of an accident. If the insurance carrier discovers (and the probably will) that the vehicle was being used for business, it may take action!

​When your employees use their own cars for work . . . whether its for a quick delivery, heading to the post office to grab the mail, or picking up lunch for the office meeting, there are a few things you can do to reduce the risk for your company. 

Understanding Hired and Non-Owned Auto Liability Insurance

Your business may have some potential auto liability exposures you aren't aware of. Even if you've done all of the right things to make sure your business vehicles are properly insured, what happens when a potential loss arises from an individual employee who operates their own vehicle for company business? This is where hired and non-owned auto liability kicks in.

Do Your Employees Use Their Own Car for Business?

There are a lot of situations that have the potential for you to be held accountable for the actions of your employees while they are driving their own vehicles:
  • Do administrative employees use their own vehicles to go to the post office or bank on your company’s behalf?
  • Do you occasionally send an employee to pick up a visiting client at the airport?
  • Have you sent employees to pick up lunch, drop off mail or pick up office supplies?
  • Have you ever rented a vehicle while on a business trip?
  • Do you have a sales force to which you provide a car allowance for business use of their personal vehicles?
If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business. Your best protection: hired and non-owned automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable.

Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using their own vehicle on company business. However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage you may be vulnerable to a potentially costly exposure.

Be Sure to Add Hired and Non-Owned Coverage

Any company that allows or requires employees to use their personal car for business should either purchase hired and non-owned coverage or add it to an existing automobile policy.
  • Hired coverage is for autos that are not owned by the company or the driver, and
  • Non-Owned coverage protects vehicles owned by employees but used on behalf of the company.
​In the event of an accident, these policies supplement the driver’s personal auto policy, which is typically activated first. For minimal yearly premiums, these policies generally protect the company only, not the car or the driver.

What Does Non-Owned Auto Liability Insurance Cover?

​Non-owned and hired automobile liability insurance 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). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
For more information, or questions about your current coverage please give us a call or make an appointment HERE