What Is Hired and Non-Owned Auto (HNOA) Insurance?

Hired and Non-Owned Auto (HNOA) insurance is a specialized coverage designed to protect businesses from specific auto liability exposures. This type of insurance addresses situations where vehicles not owned by the company are used for business purposes. It fills potential gaps in coverage that standard commercial auto policies or general liability policies might leave. Understanding HNOA helps businesses safeguard against financial risks.

Understanding Hired and Non-Owned Auto Insurance

Hired and Non-Owned Auto (HNOA) insurance provides liability protection for a business when vehicles it does not own are used for work-related activities. This coverage differs from a standard commercial auto policy, which typically covers vehicles registered under the business’s name. Personal auto insurance policies often exclude coverage for business use, leaving businesses exposed to liability.

The “Hired Auto” component of HNOA insurance applies to vehicles a business rents, leases, or borrows for business use. This includes rental cars for business trips, leased vans for deliveries, or vehicles borrowed for a specific task. The coverage protects the business’s liability if an accident involving these vehicles causes injury to third parties or damage to their property. This part of the policy focuses on the business’s liability rather than physical damage to the hired vehicle itself.

The “Non-Owned Auto” component addresses situations where employees use their personal vehicles for business activities. Examples include an employee driving their own car to a client meeting, running office errands, or making deliveries. Even if an employee has personal auto insurance, their policy might not cover incidents during business use or have insufficient limits. In such cases, the business could face contingent liability, meaning it might be held responsible for damages. HNOA coverage for non-owned autos provides liability protection for the business, often activating after the employee’s personal policy limits are exhausted or if their policy denies coverage due to business use.

Businesses That Need HNOA Coverage

Many types of businesses can benefit from HNOA coverage, even those that do not own a fleet of vehicles. Any business whose employees use personal vehicles for work-related tasks faces potential liability. This includes administrative staff running errands, sales representatives traveling to client sites, or employees using their cars for deliveries. Real estate agents, home healthcare providers, and delivery services frequently encounter these scenarios.

Businesses that frequently rent or lease vehicles for operations also need HNOA. This applies to consultants traveling for client meetings, construction companies renting equipment-hauling vehicles, or catering businesses leasing vans for events. Without HNOA, an accident involving a rented vehicle could leave the business financially vulnerable.

Personal auto policies are generally insufficient for business use because most contain exclusions for commercial activities. This means an employee’s personal insurance might not cover an accident while performing work duties, transferring liability to the employer. Therefore, even if a business does not own any vehicles, its operations can still create auto liability exposure through hired or non-owned autos.

Scope of HNOA Protection

Hired and Non-Owned Auto insurance primarily functions as a liability policy, protecting the business from financial repercussions if held responsible for an accident. It covers bodily injury liability, paying for medical costs, lost income, and legal expenses for third parties injured in an accident involving a hired or non-owned vehicle used for business. This protection extends to property damage liability, covering costs of repairing or replacing another person’s vehicle or property damaged in such an incident. HNOA policies also cover legal defense costs for covered claims.

HNOA insurance does not cover physical damage to the hired or non-owned vehicle itself. For instance, if a rented van is damaged, the HNOA policy would not pay for repairs; this would usually fall under a separate collision damage waiver or the vehicle owner’s policy. It also does not cover damage to an employee’s personal vehicle.

Injuries to the employee driving the vehicle are not covered by HNOA. Such injuries are typically addressed by Workers’ Compensation insurance, which covers employee medical expenses and lost wages due to work-related injuries. HNOA also does not cover damage to property owned by the insured business transported in a hired or non-owned vehicle. HNOA serves as a specific liability gap filler, complementing other business insurance policies.

Acquiring HNOA Coverage

Hired and Non-Owned Auto coverage is generally not available as a standalone policy. It is most commonly added as an endorsement or rider to a business’s existing Commercial General Liability (CGL) policy or Commercial Auto policy. Some insurers may also offer it as part of a Business Owner’s Policy (BOP).

To obtain HNOA coverage, a business typically works with an insurance broker or agent. The process involves assessing the business’s specific needs and exposures. This assessment includes detailing how often employees use personal vehicles for business, the frequency of vehicle rentals, and the types of business activities performed using these vehicles. Providing accurate information helps the insurer tailor appropriate coverage limits.

Businesses should consider appropriate liability limits to adequately protect their assets from potential lawsuits. While state minimums for auto liability exist, these may not be sufficient for business-related risks, and higher limits are often advisable. The cost of HNOA coverage varies based on factors such as the number of employees, the frequency and nature of vehicle use, and the business’s claims history.