If your small business chooses to rent a vehicle for work purposes, it needs to be insured with hired and non-owned auto (HNOA) coverage. But why? In a word—risk. Any time you or an employee get behind the wheel of work vehicles, your company is exposed to certain levels of risk, be it third-party property damage or bodily injury.
Whether or not you’re a safe driver, there are factors that are out of your control—an animal crossing, a pedestrian walking into the road, a motorcycle in your blindspot, or another driver crashing into you. In the blink of an eye, before you can even react, your business, and its bottom line, could be in jeopardy. However, with a hired and non-owned insurance policy, you can protect yourself from risk.
Interested in seeing how a hired and non-owned auto insurance could safeguard your small business when you rent a vehicle? Let’s find out.
What is hired and non-owned auto insurance?
Hired and non-owned auto insurance policies are often added as an endorsement to a general liability insurance policy. They are available to any small business owner that wants protection on any vehicle that they:
This type of policy only applies to you (the Named Insured) and your employees. Typically, it’s split up into two categories:
- Hired autos– Autos that you lease, hire, rent, or borrow but not from an employee, business partner, or family member. For example, should your business rent a car to take a team from the airport to a meeting, it would be covered.
- Non-owned autos – The vehicle is owned by an employee or borrowed from a friend. For instance, should your employee use their car for a work errand, it would be covered from an accident since it was being used for business purposes. That is, so long as they weren’t found negligent.
These subsections of the policy work together to ensure you’re shielded from the financial fallouts of an accident.
What does hired and non-owned auto insurance cover?
Now, you may assume that your personal auto insurance is all the coverage you need. Unfortunately, that’s not the case. Personal auto policies don’t cover lawsuits resulting from commercial use.
So, what does hired and non-owned cover? HNOAcoverage helps pays for the damages in a work-related accident, including:
Property damage – Your business hires a moving van to transport supplies to a new office. Should an employee (driving the moving van) get into an accident and damage a third party’s vehicle, it would help cover the costs of repairing or replacing the third party car. (Note: If the employee was driving their own car and got in an accident, HNOA won’t cover vehicle repairs to the employee’s car. That would have to be handled by their personal insurance policy or the rental insurance.)
Bodily injury – Your employee drives their vehicle to pick up lunch for a meeting. Should they crash into another vehicle, the policy could help cover the costs of their hospital bills, physical therapy, and pain and suffering.
Legal fees – You rent a vehicle for a work trip and total another car. Should they take you to court, the hired and non-owned auto policy could help pay to hire a legal team.
If you’re sued over injuries or damages from a car crash, your hired and non-owned policy would shield you. That said, remember that the policy won’t cover vehicle repairs, collision damage, or property that was being transported. For those coverages, you’d need a commercial auto liability policy.
What would disqualify coverage?
There are some exceptions to the rule. If you or an employee is found negligent, you may not receive coverage. Examples of negligence include:
- The damages exceed the minimum limits that are required by the state
- The vehicle is improperly maintained
- The driver’s record is substandard
- Your employee’s insurance lapsed
In addition, if you own the vehicle, that won’t be covered. For that, you’d turn to your personal or commercial auto policy.
Short-term vs. long-term leases
Similarly, only certain types of leases qualify for hired auto coverage, specifically short-term leases. But how do you distinguish between a short-term and long-term lease?
- Short-term leases– Autos that are rented for a period that is less than 6 months.
- Long-term leases– Autos that are rented for a period longer than 6 months.
Since many people wind up purchasing a vehicle after a long-term lease, this delineation was made to prevent confusion or loopholes.
What factors impact HNOA insurance costs?
There are several factors that will impact the cost of a hired and non-owned auto insurance policy. Typically, it’s an inexpensive addition, but that depends on:
- The number of vehicles that need to be insured
- The type and value of the vehicle
- Claims history
- Employee driving records
- Policy limits
- Policy deductible
- Level of risk involved
How do you mitigate risk to your small business?
If you regularly rent, lease, borrow, or hire a vehicle for commercial purposes, there are easy ways you can reduce your risk exposure. For example:
- Regularly perform vehicle record checks on employees
- Enforce requirements such as driver age or driving experience
- Use technologies that monitor driver behavior
- Make sure that employees have personal auto insurance coverage
By taking these actions, you can minimize the liability gaps in your small business.
Hired and non-owned auto insurance protects your small business from property damage and bodily injury claims when you rent, lease, hire, or borrow a vehicle for work-related purposes. But that’s just one of the various ways that you can shield your enterprise from the risk it regularly faces.
So, how do you make sure that your business has the protection you need?
Meet Thimble—the fast, easy, and affordable way to shield your business from liability.
Thimble offers on-demand general liability insurance and professional liability insurance policies that go by the hour, day or month. We’re also excited to share that soon, we’ll offer a hired and non-owned business auto policy with one minor exception (no leases).
Purchasing a policy via Thimble is a breeze—it takes less than a minute. Just download the Thimble mobile app or click “Get a Quote,” input a few details about your business, and we’ll generate your free quote. Click purchase and a Certificate of Insurance (COI) will be ready in your email inbox and in the Thimble app.
With Thimble, it’s easy to protect your business whether you’re on the job or on the go.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.