What Is Hired Auto Insurance Coverage
Hired auto insurance coverage is a commercial policy that protects a business when it operates vehicles it does not own. It pays for liability, physical damage, and sometimes other costs that arise from accidents involving those rented, leased, or borrowed cars, trucks, and vans. The coverage activates when a business uses a non-owned vehicle for work purposes and typically steps in where the business owner's general auto policy falls short.
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What Hired Auto Coverage Includes
Most hired auto policies cover third-party liability when the business is legally responsible for injuries or property damage caused by a rented or borrowed vehicle. They also cover physical damage to the hired vehicle itself, often after the at-fault party's insurance or the rental company's coverage has been applied. Some policies extend to medical payments or personal injury protection for occupants, depending on the insurer and the specific terms selected.
How Hired Auto Differs from Non-Owned Coverage
Hired auto insurance is distinct from non-owned auto coverage, even though both apply to vehicles a business does not own. Hired coverage applies specifically to vehicles the business has rented, leased, or borrowed under a formal agreement, and it usually includes physical damage to that vehicle. Non-owned coverage typically applies to employees who use their personal cars for work and generally focuses on liability rather than damage to the personal vehicle.
When Hired Auto Coverage Is Required
Businesses often need hired auto coverage when their operations regularly involve rental cars, leased fleet vehicles, or temporary borrowings. Industries such as construction, delivery services, mobile repair, and field consulting frequently rely on this protection. Some clients or rental agreements may also require proof of hired auto insurance before a business can operate a vehicle on their behalf.
Key Limits and Considerations
Insurers set limits for liability, collision, and comprehensive damage separately, and businesses should align those limits with the value and use of the hired vehicles. Higher liability limits are common for businesses that operate in high-risk areas or transport passengers and cargo. Deductibles apply to physical damage coverage, and some policies exclude wear-and-tear, fines, or intentional acts.
| Attribute | Detail | Context |
|---|---|---|
| Liability coverage | Pays for third-party injuries and property damage | Required in most states for hired vehicles |
| Physical damage coverage | Covers collision and comprehensive damage to the hired vehicle | Usually subject to a deductible |
| Medical payments | Covers medical costs for occupants | Optional or included depending on the policy |
| Exclusions | Wear-and-tear, fines, intentional acts | Varies by insurer |