Hired and non-owned auto: the gap when employees drive for you

When an employee causes a crash while driving their own car or a rental on company business, the injured person can sue your business along with the driver. Your general liability policy excludes autos, and the employee’s personal auto policy may be too small or may not apply to the trip. Hired and non-owned auto liability (HNOA) is the coverage built for that claim. It protects the business, not the driver.

How does hired and non-owned auto work?

Say an employee rear-ends someone on the way to a client, and the injured driver sues the employee and your company. The car’s own insurance goes first. Once its limits are used up, or if it doesn’t apply, HNOA responds for your company, subject to its terms, paying damages up to the HNOA limit and the cost of defending the company. A rented car works the same way, with HNOA sitting on top of whatever insurance comes with the rental.

HNOA is usually written as a single limit per accident, often matching your general liability limit, such as $1,000,000. It’s for injuries and damage to other people. It doesn’t pay for the car itself.

When is an employee driving for your business?

More often than most owners think. Any trip for the business in a vehicle the business doesn’t own counts, including:

• Errands like supply runs, the bank deposit, and the post office.
• Client visits and sales calls.
• Deliveries of food, flowers, parts, or paperwork.
• Rentals on business trips, and the box truck rented for a weekend move.
• Your own car, if your company is an LLC or corporation and you drive your personal vehicle for its business, since the company can be sued separately from you.

Ordinary commuting usually isn’t business use. A stop at the bank for the company on the way in can be.

Why doesn’t the employee’s personal auto policy protect the business?

Often it does, up to a point. The car owner’s policy usually pays first, and many personal auto policies extend their liability coverage to an employer for the employee’s use of the car. The trouble starts past that point, and it comes in four forms.

The first is limits. Many drivers carry limits sized for their household, not for a serious injury claim. Say a staff accountant at a small accounting firm runs a red light on the way to a client and injures another driver, and the medical bills and lost wages come to $400,000. If the accountant’s policy carries $50,000 per person, the injured driver’s attorney will look to the firm for the rest, and the firm’s general liability policy excludes autos.

The second is exclusions. Many personal auto policies exclude carrying goods or people for a fee, which can take delivery work out of the driver’s coverage entirely. Businesses with delivery drivers, like restaurants, sit right in that gap, and when it opens, HNOA can still protect the business while the driver may have no coverage at all.

The third is lapses. Personal policies cancel for nonpayment, and you won’t hear about it unless you ask for proof every year.

The fourth is the claim against the business itself. Plaintiffs often allege the business was careless in hiring, supervising, or trusting the driver, and a personal auto policy may not respond to claims about the business’s own decisions.

Who needs hired and non-owned auto?

If anyone drives for your business in a vehicle the business doesn’t own, you have the exposure. That includes a company with no employees whose owner uses a personal car for company errands, and a business that never drives at all until it rents a van twice a year. Contracts are the other trigger. Leases, client agreements, and event venues often ask for auto liability on your certificate even when you own no vehicles, and HNOA is how most small businesses meet that.

Underwriters ask how the driving works. Tell your agent who drives, how often and how far, whether anyone delivers, and whether the drivers are employees or independent contractors, because carriers treat those two groups differently. Staffing agencies should also say whether placed workers drive for clients.

Does hired and non-owned auto cover volunteers?

It can cover the organization for them. On standard business auto forms, a car a volunteer owns and drives for your organization counts as a non-owned auto, so HNOA can protect the organization when a volunteer’s crash leads to a claim against it. The volunteer is a different story. Like an employee in their own car, a volunteer usually isn’t an insured under your policy, so their own auto insurance has to answer for them. Some carriers can add volunteers as insureds by endorsement, so nonprofits that rely on volunteer drivers should ask, and should tell their agent how many volunteers drive and for what.

What symbol is hired and non-owned auto?

On a business auto policy, hired autos are symbol 8 and non-owned autos are symbol 9, and you’ll see those numbers next to liability on the declarations. Symbol 1, any auto, includes both. If your business owns no vehicles, many carriers add HNOA to a business owner’s policy or a general liability policy by endorsement instead, so there are no symbols to find; look for the endorsement on the forms list. Certificates show it too, in the hired and non-owned boxes under auto liability.

Does hired and non-owned auto cover physical damage?

Not on its own. HNOA is liability coverage, so it’s for harm to other people and their property, not for damage to the car your employee was driving. Damage to the employee’s own car goes to their collision coverage, if they carry it. Rentals are trickier. Damage to a rented car takes hired auto physical damage, a separate coverage with its own limit and deductible, or the rental counter’s damage waiver, or coverage the employee or a company card provides, so check which one applies before the trip.

What else does hired and non-owned auto leave out?

The driver is the biggest gap. HNOA protects the business, and on most forms an employee driving their own car isn’t an insured under it, so the employee’s own liability stays with their personal policy. If they’re hurt on the job, their injuries are a workers’ comp question, not an auto one.

Vehicles the business owns are the other. A car, van, or truck titled to the business belongs on a commercial auto policy with the vehicle listed, and a long-term lease usually does too.

What to collect from every employee who drives for work

HNOA is the backstop. The employee’s own policy is still the first layer, and it’s worth keeping honest:

• A copy of the declarations page of their personal auto policy, showing their limits and the car they drive.
• Confirmation that they’ve told their insurer they drive for work, especially if they deliver anything or drive most of the day.
• A copy of their driver’s license, and consent to a motor vehicle record check if your carrier asks for one.
• Their signature on your driving policy.
• A fresh declarations page every year, on a date you put on the calendar.

Many businesses also set a minimum personal auto limit for anyone who drives for work, such as $100,000 per person and $300,000 per accident, and write it into the driving policy with a few basics: no phone use behind the wheel, and every accident reported the same day.

If people drive for your business and your policy doesn’t show hired and non-owned auto, start a quote and tell us who drives, how often, and whether they deliver.

Quick answers

Does HNOA cover me when I drive my own car for my company?

It covers the company, if the company is a separate entity like an LLC or corporation. Your own liability as the driver stays with your personal auto policy, so tell that carrier how you use the car.

Do I need it if employees only drive now and then?

Occasional driving is the usual reason businesses buy it, because one serious crash on a bank run can outgrow the employee’s limits. How often people drive mostly changes how the carrier rates the coverage, not whether the exposure exists.