What Is Hired and Non-Owned Auto Coverage?

Hired and Non-Owned Auto (HNOA) coverage is a type of business insurance designed to address specific liability risks that arise when a company utilizes vehicles it does not own. This coverage is distinct from standard commercial auto policies, focusing on situations where businesses rely on rented cars, leased vans, or even employees’ personal vehicles for operations. It serves to close a potential gap in a business’s overall insurance portfolio, protecting against financial repercussions from accidents involving such vehicles during business-related activities.

Defining Hired and Non-Owned Auto Coverage

Hired Auto refers to vehicles that a business leases, rents, or borrows for its operational needs. This category includes vehicles like rental cars used for business trips, or vans leased for temporary projects or deliveries. The defining characteristic is that the business does not hold the title or legal ownership of these vehicles. If an employee is driving a rented truck for a business delivery and causes an accident, the hired auto portion of the coverage would apply.

Non-Owned Auto, conversely, pertains to personal vehicles, such as those owned by employees, partners, or volunteers, that are used for business purposes. This could involve an employee driving their personal car to a client meeting, making bank deposits for the company, or picking up supplies. While the vehicle itself is privately owned, its use in a business context creates a liability exposure for the company. Both hired and non-owned auto coverages are structured to protect the business from liability claims stemming from the use of these unowned vehicles.

Scenarios Requiring This Coverage

Employees using their personal vehicles for company errands, such as delivering documents, visiting clients, or transporting small equipment, are a common scenario. Companies that rent vehicles for business travel, events, or to supplement their fleet during peak periods also face this exposure. Even volunteers driving their own vehicles for a non-profit organization can create a liability risk for that organization.

Industries like consulting firms with traveling staff, small businesses with occasional delivery needs, or non-profit organizations relying on volunteer drivers need this coverage. Construction companies that rent specialized equipment or vehicles for projects also fit this category. These scenarios create a specific liability gap because a business could be held responsible for an accident involving a vehicle it does not directly own or insure under its primary commercial auto policy.

Understanding Coverage Scope

Hired and Non-Owned Auto coverage primarily shields the business from liability for bodily injury or property damage to third parties. For example, if an accident causes injury to another person, the coverage can help pay for medical costs, lost income, and legal fees. Similarly, if the accident damages someone else’s property, such as another vehicle or a building, the coverage can assist with repair or replacement costs and associated legal expenses.

This coverage specifically focuses on the business’s liability to others, rather than damage to the vehicle itself or injuries to the driver. It typically does not cover physical damage to the hired or non-owned vehicle involved in the accident; separate collision or comprehensive policies would address those costs. Furthermore, it generally does not cover personal injuries to the employee driving the vehicle, as these are often addressed by the employee’s personal auto policy or, in a work-related context, potentially by workers’ compensation insurance.

Integrating with Existing Insurance

Hired and Non-Owned Auto coverage plays a complementary role within a business’s broader insurance portfolio. A standard Commercial Auto Policy covers vehicles owned by the business, providing liability and often physical damage coverage for those assets. HNOA, in contrast, fills a gap by covering liability arising from vehicles not owned by the business but used for its operations. This distinction is important because commercial auto policies generally exclude coverage for non-company-owned vehicles.

While an employee’s Personal Auto Policy (PAP) provides primary coverage for their vehicle, it often has limitations or exclusions for business use. Many personal policies are not designed to cover the increased risks associated with commercial activities. HNOA coverage steps in to protect the business’s liability beyond or in place of the PAP, particularly if the employee’s policy limits are insufficient or if a specific business-use exclusion applies. This coverage is commonly obtained as an endorsement to a General Liability policy or a Business Owner’s Policy (BOP), though it can be purchased as a standalone policy.