You may think that you have no auto liability risks if you don’t own any vehicles, but hired and non-owned auto liability coverage is exactly what you need! If your employees ever drive their personal auto for use in your business, then you have a non-owned business auto liability exposure. An auto that is rented or borrowed is considered a hired auto. You can obtain coverage for both hired and non-owned auto liability either by adding the coverage to your commercial general liability policy, or by purchasing a separate policy to only cover hired and non-owned autos. If already you own auto for your business and have a business auto policy, you still want to be sure that liability coverage is provided for hired and non-owned vehicles.
The second part of hired and non-owned auto is physical damage. Physical damage can be purchased for a hired auto, but not for a non-owned auto. If you rent a vehicle, your policy can provide comprehensive and collision coverage for the vehicle, subject to a deductible and a stated maximum amount. We still recommend you purchase the coverage that is offered by the rental car company – but that is a whole separate blog topic!
If you’re wondering why you cannot purchase physical damage for non-owned autos, here’s the reason: the physical damage coverage is provided by the policy where the auto is insured. So, if I drive my personal auto for business purposes, my personal auto policy is going to respond for physical damage coverage if there is an accident. It’s also important to note that my personal auto policy also provides liability coverage for me, but it does not provide coverage for my business, so be sure to check with your agent to ensure you have the coverage that you need.