HNOA, or hired non-owned auto insurance, is an important coverage in commercial auto insurance.
HNOA protects your business if your employees use their personal vehicles for work. It also protects your company if you regularly or occasionally rent cars or hire vehicles to conduct business.
Hired/non-owned auto is important because personal auto policies do not cover lawsuits from accidents resulting from commercial use.
What Is HNOA?
If your business does not own any vehicles, you could easily overlook exposure related to hired and non-owned auto.
Indeed, if you own a small business you almost certainly rely on non-owned vehicles to operate…
However, your employees’ personal auto policy will not protect your business from an auto related lawsuit. Anytime an employee of yours gets behind the wheel of their personal vehicle to do work for you – such as run work-related errands – your business is exposed.
If you hire, lease or borrow vehicles for work purposes, you should also consider HNOA coverage.
Hired non-owned auto is comprised of two coverages:
- Hired autos: A hired auto is any auto you lease1, hire, borrow or rent.
- Non-owned autos: A non-owned auto is an auto that is used in connection with your business, but that is not owned, leased, hired, rented or borrowed by the named insured. This includes autos owned by your employees or those that you may borrow from a friend.
HNOA covers your business for claims related to accidents involving vehicles that your business doesn’t own.
For example, if your employee rents a vehicle while attending a conference, hired auto coverage would provide coverage if your business was sued as a result of the accident.
HNOA Claim Example
An example of a hired/non-owned auto claim would be a sales person, using their own vehicle, gets in an accident while driving to a sales call.
If a sales person is heading to a meeting and causes an accident with another vehicle, the driver of the other vehicle may sue your company for expenses related to the accident.
Coverage may include physical damage to that other person’s vehicle, medical expenses, the cost of hiring an attorney to defend your business, etc.
Hired/non-owned auto is excess over underlying insurance, such as a personal auto policy.
Maintaining records of your employees’ own personal auto insurance limits is part of an overall affordable commercial auto insurance strategy.
What Is Not Covered By Hired/Non-Owned Auto?
There are several situations that may not be covered by HNOA insurance:
- Accidents that occur while your employees are using their vehicles to commute to work.
- Liability related to an accident that occurs while your employee is running a personal errand.
- Physical damage to your employee’s vehicle in an accident related to work (this should be covered by the employee’s personal auto policy).
- An employee’s physical injuries would not be covered by your business’s HNOA policy.
- Goods and equipment that are in the non-owned or hired vehicle would not be covered if they are damaged in an accident. To cover this type of property, you would want to have an inland marine or business property policy.
Also, HNOA would not cover your business if you rent, lease, hire or borrow a vehicle from an employee, business partner, limited liability company (LLC) member or member of your household.
This coverage is offered on an excess basis. This means that it kicks in once the underlying limits of insurance for a personal auto policy are met, or if the employees’ personal auto policy denies coverage.
Does It Cover Independent Contractors?
If your business has no employees, but uses independent contractors, HNOA may cover your independent contractors and may include executives.
Indeed, in the application you will indicate how many independent contractors and/or volunteers your business uses and how often.
What Does HNOA Cost?
HNOA cost is affected by the limits and breadth of insurance coverage, among other factors. Factors that may impact HNOA cost include, but are not limited to:
- Your business operations (eg. pizza delivery, construction, sales organization, solar installer, etc.)
- Your location
- The number of vehicles you want to insure
- The number of drivers
- Frequency of rentals or hired vehicles for company business
- Claims history, if any
- Driver history
Limits for coverage may be available from $100,000 – $1,000,000 per occurrence, or greater.
Hired non-owned auto may be purchased in combination with a business auto policy, as an endorsement to a commercial general liability policy, business owner’s policy (BOP) or package policy or on a standalone (aka “monoline”) basis. You may also purchase only “hired auto” or only “non-owned auto“.
Depending on how much insurance you are buying in other areas, hired and non-owned auto coverage may be included for free within an existing policy. However, an increase in claims related to distracted driving has caused a spike in auto insurance rates.
When underwriting HNOA, the underwriter will ask for information on the drivers, the estimated annual cost of rented or hired vehicles… If this number is close to zero, the “hired” portion of the cost should be very low.
If you have questions about auto insurance, business auto for owned vehicles, or hired and non-owned auto coverage, please schedule an appointment with me… I look forward to talking with you!
