Commercial Auto vs. Hired and Non-Owned Auto Insurance

Commercial Auto vs. Hired and Non-Owned Auto Insurance. Anyone whose business demands they drive a vehicle for the purposes of their work will need to buy auto insurance. This covers a wide range of uses, such as travelling between different work locations, visiting customers or driving around other employees. Anything, in fact, that's on behalf of the company.

But what kind of auto insurance do you need? You could either get commercial auto vs. hired and non-owned auto insurance depending on your business and who owns the vehicles that you use. Here we explore the similarities and differences between the two.

Commercial auto vs. hired and non-owned auto insurance - learn which policy covers what and if you need one or both for your business.

What Is Commercial Auto Insurance?

Commercial auto insurance covers the vehicles used in conducting your business. Whether you use your own car or a fleet of pickups, box trucks and even trailers to get the job done, business auto offers the protection - liability, personal injury/medical, comprehensive, and collision coverage and more - to keep your business moving forward. Large fleets, as well as small businesses, are adequately covered by this insurance policy.

Below you will see some of the differences between commercial auto vs. hired and non-owned auto insurance.

What Is Hired and Non-Owned Auto Insurance (HNOA)?

Hired and non-owned auto covers bodily injury and property damage caused by a vehicle you rent, hire or borrow and caused by vehicles owned by others such as employee owned autos. Your HNOA insurance policy would cover legal fees and the damages employees cause other people, including:

Medical bills
Damaged property
Auto repairs

HNOA provides two types of coverage: liability arising from the use of hired autos and liability arising from non-owned autos being used for the benefit of your business. It is important to understand the distinction because the two coverages are not always included together. Some policies may provide coverage only for non-owned autos, or only for hired autos. Your business likely needs coverage for both hired and non-owned auto. You can begin to see some of the ways commercial auto vs. hired and non-owned auto insurance is different.

Hired Auto Coverage will pay for damages caused by the insured to a third party, while they are driving a leased, hired, rented, or borrowed vehicle for business.

Non-Owned Auto Coverage protects the insured company if it is sued as a result of an auto accident that the insured, or one of the insured employees, has in a personal vehicle while on company business.

Hired vs. Non-Owned Autos

Hired Autos includes vehicles that you lease, hire, rent, or borrow, except if you do so from any employee, partner, or members of your households. "You" means the named insured. Thus, a vehicle qualifies as a hired auto only if it is leased, hired, rented or borrowed by the person or entity listed in the policy declarations. This is a key point fro commercial auto vs. hired and non-owned auto insurance.

Non-Owned Autos refer to vehicles the business does not own, lease or hire. These include autos used by your employees, partners or members for your business. Here's an example. A salesperson is on his or her way to an appointment driving their own car. But on the way to the appointment there's an accident and somebody was hurt. Whether your employee has personal insurance or not, the chance of the business being dragged into the lawsuit that is bound to follow is high. In this case, non-owned auto liability will defend the business. It is important to understand this distinction between commercial auto vs. hired and non-owned auto insurance.

Other examples of non-owned autos:

A vehicle owned by a partner of a partnership that he or she uses on company business.
A vehicle that a company president borrows from his neighbor to use on company business.
A vehicle owned by member of a limited liability company that is used in the business.

Hired and Non-Owned Auto Insurance is typically added as an endorsement on your general liability policy. A fair amount of businesses are contractually required to have commercial auto, even though they do not use any vehicles for business use. This is where commercial auto vs. hired and non-owned auto insurance becomes relevant as you can add this requirement to your GL policy.

When Does A Small Business Need Hired and Non-Owned Auto?

whether you realize it or not, you will occasionally find yourself in situations where this coverage can help you out. Errands and rental situations always come up. Examples:

You send an employee to pick up lunch.
While on a business trip, you rent a car.
To impress a visiting client, you send a limo to have him picked up.
An employee runs to pick up office supplies.

HNOA protects your company if it is brought into a lawsuit resulting from an auto accident involving the vehicles used in such errands. It's important to note that HNOA insurance does not cover commuting or personal errand time, even if errands are run during business hours. Any accidents taking place during these times would be covered on the individual's personal auto insurance policy. This is a key point about commercial auto vs. hired and non-owned auto insurance.

Similarities Between Commercial Auto vs. Hired and Non-Owned Auto

Both provide your company with special coverage for situations encountered while conducting business. Both policies provide similar coverages such as liability, collision, comprehensive, medical payments (or personal injury protection) and uninsured motorist coverage.

Both also can provide more liability coverage than a personal auto policy provides. Both provide many add-ons more suited for commercial driving, such as coverage for your:

Employees, including fellow employee coverage and broadened and blanket policies that protect additional employees or people for whom your business is doing work.
Equipment, including loading and unloading goods.
Business, which protects your assets in the event of a lawsuit.

Differences Between Commercial Auto vs. Hired and Non-Owned Auto

Commercial auto protects you against loss or damage to vehicles you own, plus the loss or damage your business vehicles may cause to others. Hired and non-owned, on the other hand, covers liability for bodily injuries and property damage caused by a vehicle you have rented, leased, hired, or borrowed, up to the policy's stated limits.

Most HNOA policies exclude bodily injuries to the employee. Also typically excluded is an employee's personal property damaged in an accident. In most cases, the driver's automobile insurance policy would pick up those costs.

Commercial Auto vs. Hired and Non-Owned Auto Insurance (What's The Difference?)