Short answer
Hired and non-owned auto insurance covers your firm’s liability when employees drive vehicles the firm doesn’t own for work, such as personal or rental cars. Many architecture and engineering firms own no vehicles, yet staff still drive to site visits and client meetings. It usually covers liability to others, not damage to the vehicle itself. Terms vary by carrier and policy.
What hired and non-owned auto insurance means
The name describes two types of vehicles. Hired vehicles are ones your firm rents or borrows. Non-owned vehicles belong to someone else, usually an employee driving a personal car for work.
If an employee causes an accident while on a work errand, the injured party may bring a claim against the firm as well as the driver. This coverage is designed to respond to that liability. It doesn’t turn a personal car into a company vehicle.
Why firms without company cars still need to think about it
Many design firms own no vehicles, so they assume auto insurance doesn’t apply to them. A personal car used for a site visit changes that picture. The same applies to a rental car on a business trip or a ride to a client’s office.
A commercial auto policy is built for vehicles your firm owns or leases. If you own none, hired and non-owned auto insurance often fills the gap. If you do own vehicles, those need a commercial auto policy.
A simple example
An engineer drives a personal car to a site visit and rear-ends another vehicle. The other driver is injured and brings a claim against the engineer and the firm. The engineer’s personal auto policy may respond first, depending on its terms and any business use exclusions. Hired and non-owned coverage can help address the firm’s own liability.
Where you can get hired and non-owned auto insurance
Many firms add it to a general liability policy or a business owner’s policy for a small additional cost. Some carriers include it, and others offer it as an option. Ask whether it appears on your quote, since it isn’t always listed prominently.
Our article on whether architects and engineers need general liability explains how a business owner’s policy packages these coverages. You can also see how a general liability and property policy is structured.
What hired and non-owned auto insurance usually does not cover
Coverage depends on the policy, but a few limits come up often:
- It typically responds to liability, not damage to the employee’s car or the rental.
- It doesn’t replace the driver’s personal auto policy.
- It may not apply if the firm owns the vehicle.
- It may exclude certain uses, such as hauling goods for hire.
Rental car damage is usually handled through the rental agreement or another policy. Check how your coverage treats it before you rely on it.
Contracts and umbrella limits
Some clients and public entities ask for proof of auto liability, even when your firm owns no vehicles. The request may not say which type of auto coverage they want. Our insurance requirements check can help you see what a contract is asking for.
An umbrella liability policy may also sit over auto coverage, depending on its schedule of underlying policies. If a contract asks for higher auto limits, review which policies the umbrella actually sits over.
What to check before buying hired and non-owned auto insurance
- Do employees drive personal cars for site visits, errands or client meetings?
- Does your firm rent vehicles for business trips?
- Does your firm own or lease any vehicles?
- Does your general liability or business owner’s quote include hired and non-owned auto?
- Does a contract ask for auto liability, and at what limit?
Related questions
What is hired and non-owned auto insurance?
It covers your firm’s liability when employees drive vehicles the firm doesn’t own for work, such as personal or rental cars.
Does it cover damage to my employee’s car?
Generally not. It typically addresses liability to others, so check the policy for physical damage coverage.
Do I need hired and non-owned auto insurance if I work alone?
It depends on your operations and contracts. A sole owner who drives to client sites may still want to ask about it.
Is it the same as commercial auto?
No. Commercial auto covers vehicles the firm owns or leases. Hired and non-owned coverage addresses vehicles the firm doesn’t own.