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Non-Owned and Hired Commercial Automobile Exposures: Are You Covered?

  • By:
  • Alliance Insurance Group
  • |
  • Jun. 15th, 2016

When your company has a fleet of automobiles, insuring them is a fairly straightforward process. But what about when an employee uses their car for company business or you have rented a vehicle for one of your employees to drive?

Although you've gone to great lengths to make sure your own fleet has comprehensive automobile insurance, it's possible that your business has exposures you may not have considered.

Most people are not aware that the following activities may create gaps in their insurance coverage:

  • An employee uses their personal vehicle to run a quick business errand; perhaps to make a deposit at the bank or to pick up stamps at the post office
  • Someone from your office uses their personal vehicle to grab coffee, lunch, or office supplies
  • Your employee rents a vehicle while on an out-of-state business trip
  • The company rents a van to move equipment across town

In the event that an employee in one of these situations gets into an accident, your company could be held liable and sued for damages. A basic auto policy only covers employees when they're using company-owned vehicles on company business, but there are many situations that fall outside of that criteria.

To protect your company from a coverage gap like the ones described above, Alliance recommends non-owned and hired auto liability coverage. This type of commercial auto insurance covers property damage or personal injury caused by a vehicle you don't own (a non-owned vehicle, typically owned by an employee) and vehicles you hire (including rented or borrowed vehicles). This type of coverage is typically added on to your business policy. It protects your company's assets in the event of an accident when an employee is driving a non-owned or hired vehicle and conducting company business.

While it's true that an employee's personal automobile insurance may cover some of the damage incurred in an accident, there's a strong likelihood that the costs and liability could far exceed their policy limit. It’s even more likely that the policy will not extend protection to you, the employer. In addition to that, there may also be a business-use exclusion on the employee’s policy, preventing them from recovering any damages. Without the proper commercial auto liability insurance, your company could be vulnerable to unforeseen exposures.

We recommend you check your commercial automobile policy. If you don't have non-owned and hired commercial automobile coverage, consider adding it to your policy.

Alliance Insurance Group has a team of experts, who understand how a commercial policy should be written in order to minimize your exposures. For more information on how the right liability coverage can keep your business safe, contact us to speak with a specialist. You can also visit our Knowledge Center, or browse more topics at our blog, for industry-specific information.