For businesses, there are a couple of little known, but very important, coverages called Hired & Non-owned Auto Liability. You may be exposing your business to risk without even knowing it.
The standard business auto policy provides coverage on vehicles that are owned by the business. This is why it’s a good idea to title the vehicle to the business if it’s going to be used for business and if it’s going to be insured on the business policy.
What about vehicles that might be used for business that aren’t actually owned by the business?
Hired Auto Liability – Protects the business against claims arising out of the use of a vehicle that is not owned by the business, but that you have rented or borrowed for business purposes
Non-owned Auto Liability – Protects the business against claims arising out of an employee’s use of their vehicle for business purposes.
Put simply, if the business rents or borrows someone else’s vehicle to use for business, you need this coverage. If your employee(s) use their vehicle for business, you need this coverage.
These coverages can typically be added to a business liability policy. More appropriately, they can be included on your business auto policy. The cost for both can usually be under $150 per year.
An important thing to note is that these coverages protect the business, not the owner of the vehicle.
Let’s look at some examples:
– You (the business) rent a limousine to take a client to lunch, or a show.
– You ask a friend or an employee to pick up office supplies and they use their own vehicle.
– You need to borrow or rent a larger vehicle to do a job that your current fleet of vehicles cannot do.
– And, my personal favorite, an employee uses their vehicle to go out for pizza to bring back to the office.
Any of these scenarios sound familiar? You probably don’t think twice about it. If any of these happen in your business you need Hired & Non-owned Auto Liability.
Think about this in more detail. Your employee is driving their car to the local pizza shop because your office is celebrating a good sales month. They’ll be bringing back several pizzas for your business to share. On the way back to the office the smell of pizza starts to get to the driver making them very hungry. So, they decide to grab a slice while behind the wheel. (I’m just making this up, people. I wouldn’t recommend chowing and driving!) Well, the pizza is hot and gooey and the driver burns their lip and cheese drips on their pants… I’m guessing you see what’s coming before the driver does, an Accident! The driver runs a red light and plows into another vehicle. Ok, so as to not get overly dramatic, let’s keep damage and injuries to a minimum. The point is, your business could very easily get sued for one of your employees causing an accident, whether the accident is severe or not. Without Non-owned Auto Liability your business will not be protected.
Another common scenario: You’re a contractor. While on the jobsite you realize you need more materials. You send an employee in their own vehicle to pick them up. Or, you get in another contractor’s truck because it’s bigger than yours. You or your employee cause an accident. Without Hired & Non-owned Auto Liability your business will not be protected.
Or, before leaving home to go to work you remember you need to pick up a generator (or other piece of equipment) for the project you’re doing today. Your neighbor has a nice, new Ford F250 (or Chevy, GMC, whatever…) You ask if you can borrow the truck since the generator won’t fit in your little sports coupe, or on the back of your motorcycle. While on the way to work you cause an accident in your neighbor’s new truck. Maybe you were having too much fun finding out how many satellite stations you could listen to and your attention was off the road for just a short period of time. Not only will your neighbor be a bit upset with you, but unless you have Hired Auto Liability your business will not be protected against a claim.
What about a business that doesn’t have a business auto policy? Maybe you’re a sole proprietor who makes flower arrangements and your vehicles are insured on a personal policy. You use the family minivan to deliver flowers. Without Hired & Non-owned Auto Liability attached to the business liability policy, the business might not be protected against a claim.
In summary, don’t stop having those office pizza parties. Just add Hired & Non-owned Auto Liability to your insurance portfolio. The sooner the better.