Hired and Non-Owned Auto Coverage: The Gap Most Businesses Miss
Many business owners assume they are protected whenever an employee drives for work. Unfortunately, that is not always true. A business can face serious liability if an employee causes an accident while running company errands in a personal vehicle or a rented vehicle is involved in a crash.
That is where hired and non-owned auto coverage comes in. This often-overlooked insurance coverage can help fill a gap that many contractors, service businesses, and small companies do not realize exists until a claim occurs.
What Is Hired and Non-Owned Auto Coverage?
Hired and non-owned auto coverage, often called HNOA insurance, is a type of business auto liability coverage that may help protect your business when vehicles you do not own are used for business purposes.
The coverage generally falls into two categories:
Hired autos: Vehicles your business rents, leases, or borrows for work purposes.
Non-owned autos: Vehicles owned by employees, partners, or other individuals that are used for business activities.
This coverage is commonly added to a commercial auto policy or, in some cases, may be available through a business owner's policy depending on the insurer and policy structure.
Why Is Hired and Non-Owned Auto Coverage the Gap Most Businesses Miss?
The reason hired and non-owned auto coverage is often called the gap most businesses miss is simple: many businesses do not own company vehicles and assume they have no commercial auto exposure.
However, business-related driving happens every day.
Consider these common situations:
An employee drives their personal car to a job site.
A manager picks up supplies from a hardware store.
A technician delivers equipment using their own truck.
A business rents a van for a temporary project.
A contractor flies to another city and rents a vehicle for meetings.
In each of these scenarios, a vehicle is being used for business purposes. If an accident occurs, the business could potentially face liability even though it does not own the vehicle.
That is the gap hired and non-owned auto coverage is designed to address.
How Does Hired Auto Coverage Work?
Hired auto coverage generally applies to vehicles that a business rents, leases, or borrows for work-related activities.
For example, imagine a roofing contractor rents a truck for a week because one of their regular vehicles is undergoing repairs.
While driving to a project site, an employee causes an accident. Depending on the policy terms and the circumstances of the loss, hired auto liability coverage may help address claims made against the business.
It is important to understand that coverage details vary by policy. Coverage should always be reviewed with a licensed insurance agent.
Common Examples of Hired Autos
Rental cars during business travel
Rental pickup trucks
Temporary work vans
Leased commercial vehicles
Borrowed vehicles used for business operations
How Does Non-Owned Auto Coverage Work?
Non-owned auto coverage generally applies when employees or other authorized individuals use their personally owned vehicles for company business.
Many business owners mistakenly assume the driver's personal auto insurance provides all necessary protection. While the driver's policy may respond first in many situations, the business could still be drawn into a lawsuit after a serious accident.
For example:
A plumbing company employee drives their own vehicle to pick up materials for a project. On the way, they are involved in an accident that results in injuries and property damage.
The injured party may pursue claims not only against the driver but also against the business that directed the employee's work activities.
In situations like this, non-owned auto liability coverage may help provide protection for the business depending on the policy terms.
Businesses That Often Need HNOA Coverage
Many owners assume only transportation companies need commercial auto insurance. In reality, hired and non-owned auto coverage may benefit a wide variety of businesses.
Examples include:
General contractors
Electricians
Plumbers
HVAC contractors
Landscapers
Property managers
Consultants
Engineers
Sales organizations
Cleaning companies
Technology service providers
Real estate professionals
Any business with employees or staff members who drive for work should evaluate whether this coverage makes sense.
Common Situations Where Coverage May Apply
Understanding real-world examples can help illustrate why this coverage matters.
Employees Driving to Job Sites
A carpenter drives their personal truck from one project location to another during the workday.
Picking Up Materials
A contractor sends an employee to purchase supplies at a local building supply store.
Business Errands
An office manager uses their personal vehicle to make a bank deposit or deliver paperwork.
Rental Vehicles During Travel
A company representative rents a vehicle while attending a conference or meeting clients in another state.
Temporary Fleet Needs
A business rents additional vehicles during its busiest season to meet increased customer demand.
These activities may create liability exposures that many business owners overlook.
What Hired and Non-Owned Auto Coverage Typically Covers
Coverage varies by insurer and policy language, but hired and non-owned auto insurance is generally focused on liability protection.
Depending on the policy, it may help address:
Bodily injury claims
Property damage claims
Legal defense expenses
Lawsuits involving covered business-related vehicle use
The exact scope of coverage depends on the policy's terms, exclusions, endorsements, and conditions.
Always review policy details carefully with your insurance professional.
What Hired and Non-Owned Auto Coverage Typically Does Not Cover
A common misunderstanding is that HNOA coverage automatically protects the vehicle itself.
In many cases, hired and non-owned auto coverage is designed primarily for liability claims against the business.
Coverage may not apply to:
Damage to an employee's personal vehicle
Routine vehicle maintenance
Vehicle wear and tear
Certain physical damage losses
Personal use unrelated to business activities
Policy terms vary, making it important to understand exactly what is and is not included.
Hired and Non-Owned Auto Coverage vs. Commercial Auto Insurance
These coverages often work together, but they are not the same thing.
Coverage Type | Primary Purpose |
Covers vehicles owned by the business | |
Hired Auto Coverage | Covers liability involving rented or borrowed vehicles used for business |
Non-Owned Auto Coverage | Covers liability involving employee-owned vehicles used for business |
Businesses that own company vehicles often carry commercial auto insurance while also adding hired and non-owned auto coverage to address additional exposures.
Why Contractors Often Need HNOA Coverage
Contractors are among the businesses most likely to encounter hired and non-owned auto exposures.
Consider how often employees:
Travel between job sites
Pick up materials
Meet customers
Transport tools
Rent equipment-related vehicles
Many contractors believe general liability insurance covers every business-related accident. However, auto-related claims are often handled differently and may require specific auto liability coverage.
The Insurance Information Institute provides educational resources on commercial auto exposures and business liability risks at https://www.iii.org.
Risk Management Tips for Business Owners
Insurance is only one part of managing vehicle-related risks.
Business owners should also consider implementing policies and procedures such as:
Verifying employee driver's licenses
Reviewing motor vehicle records when appropriate
Creating written driving policies
Requiring proof of personal auto insurance
Establishing safe driving expectations
Documenting vehicle use procedures
The Occupational Safety and Health Administration (OSHA) also offers workplace safety guidance that can help employers build stronger safety programs: https://www.osha.gov.
While these measures cannot eliminate risk, they may help reduce the likelihood of accidents.
How Much Does Hired and Non-Owned Auto Coverage Cost?
Business owners often ask whether HNOA coverage is expensive.
The answer depends on several factors, including:
Industry
Business size
Number of employees
Driving exposure
Geographic location
Claims history
Insurance carrier guidelines
Costs vary widely by business, state, and insurer. Some businesses find HNOA coverage to be a relatively affordable addition to their overall insurance program, but pricing should always be evaluated based on your specific operations.
Questions to Ask Your Insurance Agent
If you are unsure whether your business needs hired and non-owned auto coverage, consider asking:
Do my employees ever drive their own vehicles for work?
Are rented vehicles covered under my insurance program?
Do I have hired auto liability coverage?
Do I have non-owned auto liability coverage?
Are there exclusions that could affect my operations?
What limits may be appropriate for my business?
These conversations can help identify potential gaps before they become costly problems.
Frequently Asked Questions
What is hired and non-owned auto coverage?
Hired and non-owned auto coverage is insurance that may help protect a business from liability when rented, leased, borrowed, or employee-owned vehicles are used for business purposes.
Do I need hired and non-owned auto coverage if I do not own company vehicles?
Possibly. Businesses without company-owned vehicles may still face liability when employees use personal vehicles for work-related activities.
Does hired and non-owned auto coverage cover employee vehicles?
It generally focuses on liability claims involving business use of employee-owned vehicles. Coverage for damage to the employee's personal vehicle may depend on other insurance policies and policy terms.
Is hired and non-owned auto coverage included in general liability insurance?
Not always. Auto-related liability exposures are often excluded from general liability policies and may require separate coverage. Policy terms vary.
Does every contractor need hired and non-owned auto coverage?
Not necessarily. Coverage needs depend on how the business operates, whether employees drive for work, and other risk factors. A licensed insurance agent can help determine whether it is appropriate.
Protect Your Business From Overlooked Auto Liability Risks
Many businesses discover they have a coverage gap only after an accident occurs. If employees drive personal vehicles for work, your company rents vehicles, or staff regularly travel between job sites, hired and non-owned auto coverage may be worth evaluating.
Wexford Insurance helps contractors and service businesses understand their risks and build insurance programs that fit their operations. Contact our team today to request a free quote and discuss whether hired and non-owned auto coverage makes sense for your business.
Business insurance is rarely one-size-fits-all, especially when vehicle exposure is involved. Our team works with contractors and service companies nationwide to help identify potential gaps and provide guidance tailored to their specific operations.
Call 317-942-0549 or visit https://www.wexfordins.com/ to speak with a licensed insurance professional and request your free quote.
