Being a small business owner means juggling many responsibilities, from managing employees to public relations. However, no business owner should struggle to secure the appropriate auto insurance. If you consistently rent, lease, or use a personal vehicle for work purposes it may be beneficial to consider hired and non-owned auto insurance (HNOA). HNOA insurance is a type of commercial auto insurance that may lessen the financial burden of covered accidents occurring when your employee or you are renting, leasing, or borrowing a vehicle, or when your employee is using their vehicle for business purposes. Infinity Insurance Agency, Inc. (IIA) understands the demands of entrepreneurs and business owners and is proud to work with multiple carriers to provide a diverse array of commercial and HNOA coverage options.
Understanding hired and non-owned auto insurance
Hired and non-owned auto insurance (HNOA) is usually not a stand-alone coverage but can be added onto an existing commercial auto or business owner’s policy. HNOA insurance is considered a type of liability insurance and will usually consist of bodily injury liability coverage and property damage liability coverage.
HNOA insurance includes two different pieces that are offered as a single coverage: hired auto and non-owned coverage. These two parts are:
- Hired auto insurance – This insurance, sometimes referred to as a hired auto endorsement, may apply when a business rents or leases vehicles for operations.
- Non-owned auto insurance - This can be utilized when employees use their personal vehicles for business purposes. In this context, “non-owned vehicles” refers to personal cars that your business does not own or lease.
Why is HNOA important? This insurance can be obtained to help lessen the financial risk of liability in cases of a covered accident involving a covered driver and a hired or non-owned vehicle. While commercial auto insurance provides coverage to business-owned vehicles, HNOA can be applied to vehicles that your company does not own.
The need for specialized coverage for small businesses
Common scenarios and risks:
Sometimes small businesses may encounter scenarios where they must utilize both hired and non-hired vehicles. For example, a boutique catering company that is preparing food for a wedding may need to utilize rented vans for transport. If an employee delivering the wedding cake happens to get into a covered accident on the way to the venue, it is possible they could be held liable for any bodily or property damages incurred. Or, if your employee is driving between work sites and hits another vehicle, non-owned car insurance could potentially cover the damage to the other driver's vehicle. Please be aware that HNOA insurance is only applicable to third-party coverage for a covered at-fault accident.
Financial and legal implications:
Choosing to forgo HNOA coverage may have potential financial and legal implications. Without proper coverage, both you and your employees could be held liable for a covered accident that results in the other driver’s injury, death, or property damage. Potential consequences of not securing sufficient HNOA coverage may include paying out of pocket for third-party damages incurred or dealing with costly lawsuits.
Comparing hired vs. non-owned auto insurance
Key Differences:
The main difference between hired and non-owned auto insurance is that hired coverage will only apply to vehicles that are being leased or rented for business purposes. While non-owned applies to personal vehicles being used for business that are not owned by the company. This insurance will be utilized (if available) if the driver’s personal insurance limits are exhausted or they discover the individual was conducting work-related activities at the time of the accident. It is also possible that the HNOA coverage would kick in if the injured third party named the business, not the individual in a potential lawsuit.
State-Specific Considerations:
Remember that commercial auto insurance coverage laws are set individually by each state. This means that depending on where you live, you will be required to obtain more or less coverage. For example, in California, car rental companies don't need to provide liability protection.
Coverage details and policy components
Wondering what HNOA insurance specifically entails? Generally, this insurance will include bodily injury liability and property damage liability coverage. HNOA insurance may offer potential coverage for third-party expenses relating to:
- Hospital bills and medical costs
- Lost income
- Funeral and burial expenses
- Legal and settlement costs/expenses
- Vehicle repair
- Repair or replacement costs for property damage
Business-related activities that HNOA coverage can typically be applied to can range from transporting inventory to traveling between work sites.
Common restrictions or exclusions that small business owners should be aware of when it comes to an HNOA policy include, but are not limited to:
- Bodily injuries to you or your employees
- Damage to your hired or non-owned vehicle
- Hit-and-run accidents
- Items that were stolen from the insured vehicle
- General wear and tear of the insured vehicle
If you wish to obtain coverage beyond the third-party coverage you can always opt to supplement your commercial coverage with additional insurance, such as comprehensive or collision coverage.
How to determine if this coverage could be beneficial
From food trucks to architecture firms, every business is unique in its vehicle and coverage needs. Taking the time to assess your business insurance coverage requirements can help you determine whether HNOA coverage could be right for you. Evaluate your current vehicle usage and your business risk profile.
HNOA insurance may be useful if you own a company that frequently engages in any of the following activities:
- Hires vehicles for business travel and other business-related activities
- Leases commercial vehicles for extended periods
- Or tasks employees with using their personal cars to conduct work-related tasks
Importance of Bilingual Support
At IIA we are proud to offer Spanish-bilingual support to our community. Our agents are knowledgeable about our commercial coverage options and are familiar with factors that may be relevant to businesses serving Hispanic communities.
How to get a quote with IIA
Want to explore HNOA options and compare rates with Infinity Insurance Agency, Inc.? Call 1-855-478-3705 to receive a free quote today!