The phrase “better safe than sorry” could have been written with commercial insurance in mind, especially when it comes to vehicles being driven for business purposes. Sure, there’s commercial auto insurance to protect you against risks involving your business’s vehicles.
There’s just one problem:
Commercial auto insurance only covers vehicles owned by your business, not those owned by your employees or those you rent. For many businesses, this is a pretty significant risk.
But not to worry:
We’re going to tell you all about a possible solution – hired and non-owned liability insurance.
What is hired and non-owned liability insurance?
Hired and non-owned insurance will protect your business if your employees ever drive their own vehicle for business purposes (that’s the non-owned portion) and if you or your employees ever have to rent or borrow a vehicle to use for business purposes (that’s the hired portion.)
Your business could be found legally liable if one of your employees is driving a car that your business doesn’t own for business purposes and gets into an accident. But hired and non-owned insurance would save the day.
Does my business need hired and non-owned insurance?
You might be wondering if hired and non-owned is really necessary. What about the employee’s personal auto insurance? Why does your business need extra insurance – the employee was the one who caused the accident, after all, wouldn’t their insurance pay? Well, the employee’s auto insurance could provide primary coverage if they’re driving their car for business purposes (unless they’re delivering or carrying goods, like pizza. More on that later.)
But there’s an important Catch-22:
Your employee may not have enough insurance to cover the entire cost of the claim (remember, lawsuits get expensive very quickly.) And if that happens and the accident exhausts the employee’s personal auto insurance, guess who’s on the hook for covering the rest of the claim?
Yep. You got it – your business.
So, if your employees ever have to drive their own cars or drive a rented vehicle for work purposes, you might want to consider getting this coverage. Sending your employees out on errands for your business or having to rent a vehicle on a business trip may seem harmless at the time, but these scenarios can quickly become disastrous. Your business could be found liable for any accidents that happen while the employee was “on the job” for you.
If you already have commercial auto insurance, you can just add hired and non-owned coverage to your policy. If you don’t, no problem – you may be able to get a stand-alone policy or add it to your general liability.
Pro tip: Keep in mind that the vehicles being covered by your hired and non-owned insurance cannot be owned, registered, or contracted in your business’s name or on your behalf.
Why it’s important to clarify what your employee’s personal auto insurance covers
Each auto insurance policy is different in the way they treat driving for business purposes. Most will exclude driving to deliver goods (or people) for a fee – so pizza delivery and flowers are out. Anyways, it’s important that your employees talk to their insurance provider and explain exactly what they will be using the car for.
How can I reduce my business’s risk?
Of course, it’s best to never have to use your insurance at all. There are a few things you can do to lower the chances of having a major problem on your hands.
1. Set up policies that explain your expectations for safe driving: You can create and implement policies about speeding, texting and driving, seatbelt use, and other safety measures. There are many benefits of being a safe driver, after all.
2. Have standards for the personal vehicles used for your business: Your employees’ vehicles should be safe and well-maintained.
3. Review your drivers’ records: It’s important to make sure that your employees are good drivers.
4. Check your employee’s personal auto insurance: It’s a good idea to make sure that everyone’s adequately insured.
5. Have guidelines for renting cars: Make sure your employees know what to do if they have to rent a car for business.
So, there’s some food for thought about hired and non-owned auto insurance. Remember, it’s important to cover the gaps in your business insurance. If your employees drive their own cars, this is definitely something to consider when you’re thinking about what kind of insurance you need for your business.
If you want to get quotes for business insurance, we can help. We’ll help you shop for the best coverage at the best rate. All you have to do to get business insurance quotes is call us or fill out our online form. We would be happy to speak with you about your insurance.