Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 8 minutes
Key Takeaways
- Many businesses overlook hired and non-owned auto coverage (HNOA), leading to potential liability gaps.
- HNOA protects businesses against liability from employees using their personal or rented vehicles for work-related tasks.
- Personal and commercial auto policies often do not cover non-owned or hired vehicles unless specifically included.
- Consider HNOA if employees run errands, rent cars, or drive their vehicles for business purposes.
- HNOA is typically affordable and helps fill coverage gaps, protecting businesses from costly claims.
Businesses can overlook hired and non-owned auto coverage, leaving a significant gap in their insurance. This is a common coverage gap that many companies may not remember to fill until it’s too late. You want to avoid paying thousands of dollars for an auto claim that you could have covered with the right insurance, and there is a way to cover people you employ.
HNOA is liability coverage for your business when you/your employees use (a) hired autos (rented/leased/borrowed) and/or (b) non-owned autos (employee-owned/personal vehicles used for business). It’s not limited to rented/leased vehicles.
Some Myths About Commercial Auto Insurance
People with businesses tend to make a couple of incorrect assumptions about the auto coverage they have in place for their business. They tend to A) think that the personal insurance on workers’ cars will cover an accident, and B) believe that the commercial auto insurance they have for company-owned vehicles has an extension to non-company-owned vehicles.
Personal auto insurance may cover some work-related driving, but coverage varies by insurer and use type (especially deliveries/for-hire). And commercial auto policies don’t automatically cover employee-owned or rented vehicles unless the policy is written to include hired/non-owned exposure.
Once you know this, you can easily realize that you need better auto coverage for your business to fill this gap.
Non-owned and hired coverage is for situations like the following:
Your employee drives their personal car to the bank to make a business deposit and gets into a fender-bender.
Your sales rep is using her own car to meet with clients daily, and she hits another car on the freeway.
You rented a pickup, and your employee accidentally rear-ended another vehicle, injuring someone or damaging someone else’s property.
What is Hired and Non-Owned Auto Coverage?
Now let’s talk about what this coverage actually is and what it does. HNOA typically does not insure the vehicle itself; it protects the business against liability claims (bodily injury/property damage to others) arising from use of those vehicles.
Hired autos are generally vehicles the business leases, hires, rents, or borrows—but usually not vehicles rented/borrowed from employees/partners (those are commonly treated as non-owned exposures instead).
HNOA is commonly added as an endorsement to your general liability or business owners policy. It can also be added to a commercial auto policy in some cases.
Why is Personal and Rental Insurance Insufficient?
Personal and rental insurance will need to be involved when a car that is not owned by your business is damaged during business tasks. However, even when personal or rental coverage applies, the business may still face lawsuits and liability that exceeds those limits—HNOA helps address the employer’s exposure.
HNOA is commonly written as excess over other collectible auto insurance (like an employee’s personal auto policy), but ‘other insurance’ rules vary—confirm with your agent/carrier how your policy responds in your state.
Who Needs to Have HNOA Coverage?
Now you might be wondering if you really need this coverage to protect your business. You might think you don’t want to pay for even more insurance than you are already paying for. You might think that you never run into situations where it might be needed.
This checklist of questions will help you understand whether you need this coverage for your business.
Do you have staff members who run errands for your business in their personal autos?
Do you have your team rent cars when they are on work trips?
Do you have to send people to get supplies or materials while they are on the clock?
Does your team make bank deposits frequently using their own cars?
Do you rent vehicles for specific job functions from time to time?
If you said yes to any of these, you should strongly consider HNOA (or equivalent coverage via a business auto policy) and review it with a licensed agent—your best option depends on your state, operations, and contracts.
How Does HNOA Work With My Other Coverage?
This table will show you where HNOA fits into the bigger picture.
| Policy Type | Generally Covers |
| Personal Auto | The driver/vehicle for personal use (sometimes limited business errands) |
| Commercial Auto | Owned autos and can be written to include hired/non-owned via symbols/endorsements |
| Hired and Non-Owned Auto | Autos the business rents/leases/borrows (Symbol 8 = Hired Autos and Symbol 9 = Non-Owned Autos) |
| General Liability | Bodily injury/property damage unrelated to vehicles |
| Workers’ Compensation | Employee job injuries (not third-party damages) |
What Does HNOA Cover?
Your HNOA coverage helps cover damages for bodily injury (which can include medical bills) and property damage, plus defense costs, subject to policy terms and wording.
Your HNOA may not cover damage to the vehicle that was involved in the accident, damage to a personal car, damage to cargo, tools, or business property in the vehicle, or an accident while your staff is commuting.
If your staff member is hurt, workers’ comp will cover their injuries.
This policy protects your business liability, but it does not protect for other kinds of damages or harm.
Why is This Policy Overlooked?
Many company owners don’t even think about this kind of policy because they are busy, distracted, and also not aware of how commercial auto insurance works. Most business owners think that if they have business policies protecting their commercial-use autos, they have the coverage that they need for anything auto-related that happens during business hours.
The other reason that people tend not to want to get HNOA coverage is that they are afraid that it will be spendy. This is actually usually a very affordable added coverage, so there is no reason to operate with this gap threatening your business.
Cost varies widely by industry, number of drivers, mileage, claim history, and limits. Many businesses find it affordable as an endorsement, but the only reliable way is to get a quote.
Your business may be sued for an employee’s work-related driving under principles like vicarious liability (and sometimes direct negligence allegations, e.g., negligent hiring/supervision). Outcomes depend on facts, state law, and policy terms.
Your HNOA coverage can be a big help with legal fees, medical bills, and property damage, and you shouldn’t shy away from adding this coverage to your commercial protections for your business.
What Does an Insurer Consider When Considering HNOA Coverage for a Customer?
On the insurance side of things, HNOA becomes necessary after they check on some variables. These include the number of employees driving their own cars for business purposes, the frequency with which you rent vehicles for business use, and the limits on the personal auto policies protecting the non-commercial vehicles that are in use each day.
Your premium might be lower overall if you have driver safety training in place for your staff and if you have written policies prohibiting cell phone use while in the car. You should also make sure to collect proof of insurance from all employees who will be driving for work, and you should be certain that you require certain insurance limits for those policies as well.
Your insurance agent will want to review coverage annually to keep your HNOA coverage up to date and to make sure that you have not taken on new risks that were not reported to them. Things like new subcontractors can complicate your insurance needs, especially if they drive their own cars when helping you with business tasks. As with other subcontracting requirements, you should get COIs for each sub’s auto insurance as well as their contractor’s policy.
How Can I Add This Coverage to my Policy?
It’s easy to add HNOA to your current insurance policy. You can simply call your insurance agent and ask about adding this policy. You can also add it yourself in some cases. Make sure you have the right limits in place for your policy and provide the right documentation to bind the policy. Review exclusions and make sure that you know what the policy does and does not cover in case you need to use it.
Things to Remember
Your HNOA will fill in the gaps between your business liability coverage and your commercial auto policies. Personal auto insurance coverage may respond depending on facts and policy wording, but it often doesn’t protect the employer adequately. This kind of coverage is affordable and effective for nearly any kind of business. Remember that a single accident that is not covered can cost thousands of dollars. You don’t want to have to pay for this kind of situation out of pocket, and you don’t have to.
At USA Business Insurance, we know that insurance gaps can be the reason that you lose sleep every night. Enough worrying about your business! Reach out to us today and let us help you protect your investment the smart way.
