Key points
- When an employee causes an accident in a personal vehicle while working, the business can be named in the lawsuit.
- Hired auto addresses vehicles you rent or borrow; non-owned auto addresses vehicles you don’t own that are used for your business.
- These coverages are often inexpensive relative to the exposure, but they must be on the policy.
The situation
A project manager drives her own pickup to a job site. A technician runs to the supply house in his own car because the service van is in the shop. The office manager makes a bank run. You rent a truck for a week during a busy stretch. In each case, if there is a serious accident, the injured party may look to your business — not just the driver’s personal insurance, which may have low limits.
Hired auto
Hired auto coverage generally provides liability protection for vehicles your business rents, leases short-term, or borrows. Physical damage to the hired vehicle can often be added. Without it, a business renting trucks may be relying on whatever the rental counter sells or the employee’s personal policy.
Non-owned auto
Non-owned auto coverage generally protects the business when vehicles it doesn’t own — typically employees’ personal vehicles — are used in the course of business. It usually does not cover damage to the employee’s vehicle, and the employee’s personal auto policy typically responds first for the driver.
Questions to answer
- Do employees ever use personal vehicles for work, even occasionally?
- Do you rent vehicles or equipment haulers?
- Do contracts require coverage for hired and non-owned autos?
- Does your umbrella schedule over hired and non-owned auto?
Good practice
Require employees who drive personal vehicles for work to carry reasonable personal auto limits, and keep proof on file. Include personal-vehicle use in your driver policy. And confirm hired and non-owned auto appears on your commercial auto policy — not just that it was discussed.