What Hired and Non-Owned Auto Insurance Covers
Hired and non-owned auto insurance is a business liability policy that protects companies when employees drive vehicles they do not own. It applies to two distinct categories. Hired auto covers vehicles rented, leased, or borrowed temporarily for business purposes. Non-owned auto covers vehicles employees use for work tasks while personally owning or leasing them. This coverage is typically added as an endorsement to a general liability or commercial auto policy, not a standalone policy.
More from this site
Keep reading the latest coverage
The policy pays for bodily injury and property damage that the business becomes legally liable for during a covered trip. It does not cover physical damage to the vehicle being driven, nor does it provide collision or comprehensive protection. That gap is important for businesses to understand before relying on this coverage alone.
Why Businesses Need This Coverage
General commercial auto policies cover vehicles owned, leased, or hired by the company. They do not extend to an employee's personal car used for a work errand, a client visit, or a delivery. Without hired and non-owned auto insurance, the business is exposed to claims arising from those trips. A serious accident could result in judgments that exceed the employee's personal auto limits, leaving the business responsible for the remainder.
Businesses that frequently use rental cars, borrowed vehicles, or employee-owned cars for tasks like sales calls, courier runs, or service visits face the most exposure. Even occasional use creates liability, which is why many insurers recommend this coverage as a standard part of a business risk profile.
Who Should Consider This Policy
Several types of businesses benefit from hired and non-owned auto coverage:
- Field service companies whose technicians drive customer or rental vehicles
- Real estate agents using personal cars for showings and client meetings
- Delivery and courier services relying on contract drivers
- Consultants and contractors traveling to client sites
- Any business with a reimbursement or mileage program for employee vehicles
Even businesses with a small fleet should evaluate whether their owned-vehicle policy extends to non-owned use. In many cases, it does not.
Coverage Limits and Cost Considerations
Hired and non-owned auto policies are typically written with per-accident liability limits rather than per-vehicle limits. Common limit options include $250,000, $500,000, and $1,000,000 per occurrence. The right limit depends on the nature of the work, how often vehicles are used, and the assets the business needs to protect.
Premiums are generally lower than a full commercial auto policy because the insurer is covering liability exposure only, not the vehicle itself. Costs rise with higher limits, increased annual mileage, and a history of claims or violations on the business's record.
Hired Auto vs. Non-Owned Auto: Key Differences
| Attribute | Hired Auto | Non-Owned Auto |
|---|---|---|
| Vehicle ownership | Not owned by the business or employee | Owned or leased by the employee |
| Typical use case | Rental cars, borrowed vehicles | Personal cars used for work |
| Coverage trigger | Business hires or borrows the vehicle | Employee uses personal vehicle for business |
| Physical damage coverage | Not included | Not included |
| Liability coverage | Included up to policy limits | Included up to policy limits |
How to Choose the Right Policy
Start by auditing how often employees drive vehicles they do not own. Identify the typical trip lengths, the types of roads driven, and whether any high-risk activities are involved. Share this information with your broker so the limits and endorsements match the actual exposure.
Review the policy wording carefully for exclusions. Some policies exclude vehicles used for specific purposes, such as carrying passengers for hire or transporting hazardous materials. If your business operations overlap with those exclusions, you may need a broader commercial auto policy or a specialty endorsement.
Finally, confirm that the hired and non-owned auto policy works alongside your other business insurance. General liability, workers' compensation, and commercial auto policies each address different slices of risk. A layered approach ensures no gap remains when a claim arises.