Understanding Commercial Auto Insurance Vs. Hired and Non-Owned Auto Coverage

Commercial auto insurance is one of the most important coverages for businesses that own vehicles. It can provide financial protection when any of your company-owned cars is involved in an accident or causes third-party injuries or property damage while on an official assignment. However, if you or your employees drive personal or hired vehicles for business purposes, you may wonder if you’re still protected by your commercial automobile policy. Read on to learn more about this topic.

When to Get Commercial Auto Insurance for Your Small Business

Commercial auto policies cover company-owned fleets used in business operations. They typically cover automobiles such as cars, trucks, and vans. You should obtain this coverage for any company vehicle you or your employees drive to meet with clients or transport inventory, staff, passengers, office equipment, or raw materials.

Having commercial auto insurance protects your business against financial loss resulting from a range of incidents and crash-related liabilities, such as:

  • Repair/replacement of another party’s property, such as their car
  • Medical bills for auto accident injuries
  • Damage or loss of your vehicle due to vandalism, theft, storms, etc.
  • Damage or bodily injury in accidents caused by uninsured drivers

When to Get Hired Auto Insurance and Non-Owned Auto Insurance

Hired auto insurance and non-owned auto coverages (HNOA) are for cars that are deployed in business operations but aren’t owned by the company.  If you use any of the following vehicles for official business, you should get HNOA insurance:

  • Leased or rented cars
  • Your employees’ personal cars

With HNOA insurance, you can comfortably send your employees on work errands in their personal cars. In this scenario, the policy would shield you against liability expenses if one of your employees caused an accident and injured another motorist or a pedestrian. It would cover medical costs or repair/replacement of the other driver’s car. Similarly, you’d need an HNOA policy if you used rented trucks to ferry passengers or goods.

However, under certain circumstances, HNOA doesn’t protect your company against auto liabilities or property damage. Examples include:

  • Accidents that occur when your employee is driving their personal car to work
  • When your employee is liable for an accident while on a personal errand during business hours
  • Damage to the hired or non-owned car

You may need both HNOA and commercial auto insurance policies if your company owns some vehicles and rents others or sometimes uses employees’ cars on business errands. You can add HNOA as a rider to your general liability insurance or get it as a standalone policy.

What If You Already Have Personal Auto Insurance?

Your personal auto liability insurance may not protect you when you use your personal car for work errands, such as transporting passengers or goods. In this case, you may be exposed to liability costs in the event you’re involved in a car accident without appropriate commercial auto insurance coverage.

Having the right type and amount of liability insurance for your commercial fleet gives you significant financial protection and peace of mind. Contact our experts at Burton A. Harris Insurance Agency for help finding an appropriate commercial auto insurance policy. We have the expertise to help you meet your business coverage needs.