Understanding Non-owned and Hired Automobile Liability Coverage
Does your business have potential automobile loss exposures that you are not aware of? You've taken all of the necessary steps to ensure that your own fleet operation is properly covered in the event of an accident. But what about the loss potential that arises from individual employees who operate their own personal vehicles for company business?
There are many situations that present a potential for you to be held accountable for the actions of your employees while they are driving their own vehicles.
- Do administrative employees use their own vehicles to go to the post office or bank on your company's behalf?
- Do you occasionally send an employee to pick up a visiting client at the airport?
- Have you sent employees to pick up lunch, drop off mail, or pick up office supplies?
- Have you ever rented a vehicle while on a business trip?
- Do you have a sales force which you provide a car allowance for business use of their personal vehicles?
If an employee has an accident under any of these situations, your business can be held accountable and sued for damages. Basic business automobile policies only cover employees while they operate company-owned vehicles to perform company business. Your best protection: non-owned and hired automobile liability coverage. This type of coverage will kick in if there is an accident and your company is found legally liable. Typically, an employee's personal automobile insurance will provide primary insurance to both the employee and the business if the employee is using his/her own vehicle on company business. The business non-owned and hired automobile liability coverage provides excess coverage: if no coverage exists, the business is vulnerable to a potentially costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). This coverage is typically added to your business automobile policy; however, it can be added to your general liability policy if you do not have a business automobile policy. It protects your company if it is found legally liable as a result of an automobile accident that you or your employee has in a hired or non-owned vehicle while on company business. Hired automobile coverage replaces or augments the liability coverage offered by automobile rental agencies.
Non-owned and Hired Automobile Coverage: The Basics
Who needs non-owned and hired automobile coverage?
If your employees ever drive vehicles not owned by your business for business purposes, then you need non-owned and hired automobile coverage.
What is non-owned automobile coverage?
Non-owned automobile insurance provides liability protection when an employee occasionally has to drive his or her personally owned vehicle for business purposes. It assumes that the vehicle is not owned, registered, or contracted in your company name.
What is hired automobile coverage?
Hired automobile insurance provides liability protection when an employee is driving a company rented, hired or borrowed vehicle.
Next Steps
If you do not already have this type of coverage and your employees occasionally use their own vehicles for business purposes - even quick errands - consider adding it to your business insurance package today. Consult with Eastern Michigan Agencies to review your coverage and liability limits for non-owned and hired automobiles.
Any type of loss exposure, no matter how small is too big to ignore. Call us today at (586) 778-9900 to assure that your automobile coverage meets your needs.
