What Is Hired Auto Coverage for Your Business?

Businesses often rely on vehicles for operations. While many own a fleet, they frequently use vehicles they do not own. Standard commercial auto insurance policies may not provide adequate protection in these instances. Hired auto coverage addresses this gap, offering financial security for businesses that temporarily use rented, leased, or borrowed vehicles for business purposes.

Understanding Hired Auto Coverage

Hired auto coverage is a specific type of commercial auto insurance for businesses operating vehicles they do not own. This includes any vehicle a business leases, rents, or borrows for its operations. It provides liability protection for bodily injury and property damage to third parties from an accident involving such a vehicle.

This coverage adds to a business’s existing commercial auto policy or general liability insurance. It applies when the primary insurance on the hired vehicle, such as a rental company’s coverage, is insufficient or when the business is held liable. A business can be held financially responsible for accidents involving vehicles used for its activities, even if it doesn’t own them.

Hired auto coverage helps protect a business from potential lawsuits and significant expenses resulting from accidents involving rented or borrowed vehicles. Without this coverage, a company could face substantial financial burdens if a rented or borrowed vehicle causes damage or injury.

Scenarios Requiring Hired Auto Coverage

Many businesses need hired auto coverage, even without a dedicated vehicle fleet. Common scenarios include renting a vehicle for a business trip, deliveries, or equipment transport. A marketing firm might rent a car for an employee’s client meeting, or a catering business might rent a van for an event.

Businesses might also borrow vehicles from other entities or individuals for specific tasks, such as using a borrowed truck for a corporate event. The business operating the vehicle can be held liable for accidents, even if the vehicle is insured by its owner. Standard commercial auto policies typically cover only vehicles registered to the business, leaving a gap for these temporarily used vehicles.

This coverage is relevant for businesses needing larger vehicles than they own, or when owned vehicles are out of service. Without hired auto coverage, a business faces financial risk if an accident occurs. It ensures that the business’s liability extends to these non-owned, temporarily used vehicles, protecting its assets from unforeseen incidents.

What Hired Auto Coverage Includes

Hired auto coverage primarily provides liability protection for businesses. It covers costs for bodily injury to others and property damage to third parties from an accident involving a rented, leased, or borrowed vehicle used for business. For example, if an employee driving a rented van causes an accident that injures another driver and damages their car, hired auto coverage can help pay for medical expenses, vehicle repairs, and legal costs if the business is sued.

The coverage includes legal and settlement expenses, as well as attorney fees, up to the policy’s liability limits. While the focus is on third-party liability, some policies may also offer physical damage coverage for the rented or leased vehicle itself, often called collision and comprehensive coverage. This covers repairs or replacement of the hired vehicle if damaged in an accident, stolen, or affected by other perils.

It applies whether the vehicle is driven by a business owner, an employee, or another authorized driver acting on behalf of the business. The coverage limits selected for hired auto coverage often need to match the liability limits of the business’s main commercial auto policy.

How Hired Auto Coverage Differs from Other Auto Policies

Hired auto coverage serves a distinct purpose compared to other commercial auto insurance policies: owned auto coverage and non-owned auto coverage. Owned auto coverage insures vehicles legally registered and titled to the business, covering its fleet.

Hired auto coverage addresses vehicles a business rents, leases, or borrows temporarily for operations. Non-owned auto coverage applies when an employee uses their personal vehicle for business purposes, such as running errands or client visits. Both hired and non-owned coverage deal with vehicles not owned by the business, but the distinction lies in who owns the vehicle being used.

Hired auto coverage applies where an owned auto policy would not, as the vehicle is not a permanent business asset. It also differs from non-owned coverage because it pertains to vehicles acquired for business use from a rental agency or third party, not an employee’s personal car. Businesses often purchase hired and non-owned auto coverage together as a combined endorsement to their commercial auto or general liability policy.

Obtaining Hired Auto Coverage

Acquiring hired auto coverage is a straightforward process for businesses with commercial insurance. This coverage is most commonly added as an endorsement or rider to an existing commercial auto insurance policy. It can also be appended to a general liability insurance policy or a Business Owner’s Policy (BOP).

To obtain this coverage, a business should contact its current insurance provider or a qualified insurance agent. They will discuss the specific needs of the business, including how frequently vehicles are rented or borrowed and for what purposes. The insurer will assess the business’s risk profile to determine appropriate coverage limits and premiums.

Businesses should ensure hired auto coverage integrates with their current insurance portfolio. The cost varies based on factors like the business’s industry, location, and desired coverage limits.