You don’t need a fleet of trucks or logo covered cars to have a need for business auto coverage. And if you’re a small business owner, employee that drives, or even an independent contractor, you’ve likely encountered situations requiring the use of non-owned vehicles for business purposes. Whether it’s an employee using their personal car for deliveries or you’re an employee driving a business-owned vehicle, the question arises – are you properly insured?
Here’s what you need to know:
What Is Non-Owned Auto Insurance?
Non-owned auto insurance (sometimes Hired and Non-Owned Auto [HNOA]) provides coverage when a vehicle not owned by your business is used for business purposes. This includes:
- Situations where an employee uses their personal car for tasks such as deliveries, client meetings, or running errands.
- Scenarios where you, as a contractor, employee, or business owner, drive a vehicle you don’t own while performing a business task (e.g., using a rental or a client’s car).
It’s important to note that non-owned auto insurance doesn’t cover physical damage to the vehicle itself, but instead provides liability coverage for property damage or bodily injury caused to others.
Why Is Non-Owned Auto Insurance Important?
Relying on employees’ or third-party personal auto insurance may not be enough when vehicles are used for business purposes. Here’s why:
- Gaps in Coverage: Most personal auto insurance policies exclude coverage when the vehicle is being used for business purposes.
- Employer Liability: If your employee is involved in an accident while performing a work task, your business could be held liable for damages.
Having the right coverage can save you from financial risks, legal issues, and potential damage to your business’s reputation.
Coverage for Using Employee-Owned Autos
If you’re a small business owner, there’s a good chance your employees occasionally use their own vehicles for work purposes. Here are some examples:
- Making deliveries or transporting goods.
- Driving to client meetings or events.
- Running errands such as picking up supplies.
To cover these situations, you’ll need Non-Owned Auto Liability Coverage. This protects your business in case your employee causes an accident while using their own car for work-related tasks. However, this policy does not extend to damages or repairs to the employee’s vehicle.
For employees using their personal vehicles regularly, it’s worth discussing whether they should purchase a commercial auto insurance policy to mitigate risks to their own vehicle.
Coverage for Employees Using Business-Owned Autos
Now, what happens when an employee is driving a vehicle owned by your business? Whether it’s a company van, truck, or sedan, your Commercial Auto Insurance Policy will cover:
- Liability for any damage or injuries caused to others during an accident.
- Physical damage to the company-owned vehicle.
However, as the employee, you may be able to add an endorsement to your Personal Auto Policy that will help cover employee non-owned auto. Usually called Extended Non-Owned Coverage, this can typically be added to named insureds on your personal policy that might drive the vehicle. This may assist with a coverage gap on liability during personal use of the auto.
Not sure what coverage you need? Start by reaching out to our team today to make sure your policies are matched to your risks.