If your employees ever run errands in their own cars, or you rent a vehicle for a client visit or trade show, your business carries a driving risk that most owners never think about. When an accident happens during work, the injured party’s attorney will often look past the driver and toward the company, because businesses tend to have deeper pockets. Hired and non-owned auto insurance, usually shortened to HNOA, exists to close that gap.
This guide explains what HNOA covers, what it leaves out, what affects the cost, and how to decide whether your business needs it.
What Is Hired and Non-Owned Auto Insurance?
Hired and non-owned auto insurance is commercial liability coverage that protects your business when someone drives a vehicle the company does not own for business purposes. It is really two coverages bundled together:
- Hired auto coverage applies to vehicles your business rents, leases for short periods or borrows, such as a rental car picked up at the airport for a sales trip.
- Non-owned auto coverage applies to vehicles owned by someone else, most commonly an employee’s personal car, while it is being used for company business.
The key point is that HNOA protects the business, not the driver or the vehicle. It responds when your company is held responsible for an accident that happened while someone was working on your behalf.
Why Personal Auto Policies Leave Businesses Exposed
Many owners assume an employee’s personal auto insurance will handle everything. In practice, it often falls short. Personal policies carry limits chosen by the employee, which may be the state minimum. If a serious crash produces medical bills and damages far above those limits, the injured party can pursue your business for the rest.
Some personal policies also exclude regular business use such as deliveries. HNOA sits behind those policies and protects company assets when they run out or do not apply.
What HNOA Insurance Covers
Coverage details vary by insurer and policy wording, but a standard HNOA policy or endorsement generally pays for:
- Bodily injury liability: Medical expenses, lost wages and pain-and-suffering claims from people injured in an accident caused by someone driving for your business.
- Property damage liability: Repairs to other vehicles, buildings, fences or other property damaged in the accident.
- Legal defense costs: Attorney fees and court costs if your company is named in a lawsuit, which can be substantial even when a claim has little merit.
- Settlements and judgments: Amounts your business is legally obligated to pay, up to the policy limit.
What HNOA Does Not Cover
Understanding the exclusions is just as important as knowing the benefits. HNOA typically does not cover:
- Physical damage to the vehicle being driven. If an employee’s car or a rental vehicle is damaged, HNOA will not pay to repair it. The employee’s own collision coverage or a rental damage waiver handles that.
- The driver’s own injuries. An injured employee would usually be covered by workers’ compensation instead.
- Vehicles your business owns or registers. Company-owned vehicles require a full commercial auto policy.
- Commuting and personal errands. Driving to and from the regular workplace or running personal tasks is generally not considered business use.
Who Needs Hired and Non-Owned Auto Coverage?
HNOA is a smart purchase for almost any business where people drive for work in vehicles the company does not own. Common examples include:
- Consultants, accountants and agencies whose staff visit clients
- Real estate offices where agents show properties in their own cars
- Restaurants and caterers that use staff for deliveries
- Home health and care providers whose workers drive between clients
- Nonprofits that rely on volunteers to transport supplies or people
- Companies that rent vehicles for conferences, events or business travel
Even one employee making occasional bank runs creates some exposure, and some clients require proof of HNOA in contracts.
HNOA vs. Commercial Auto Insurance
The two products are related but not interchangeable. Commercial auto insurance covers vehicles your company owns, leases long term or registers in the business name, and it can include liability, collision, comprehensive and medical payments. HNOA covers liability only, and only for vehicles the business does not own.
If your company owns even one vehicle, you need a commercial auto policy, and HNOA can usually be added to it as an endorsement. For a deeper look at policies for company-owned vehicles, read our guide to commercial auto insurance for small businesses.
How Much Does Hired and Non-Owned Auto Insurance Cost?
HNOA is one of the more affordable business coverages because the insurer takes on liability risk only, not physical damage. Many small businesses pay a modest annual premium when it is added as an endorsement to a general liability policy, business owners policy or commercial auto policy. Pricing depends on several factors:
- The number of employees who drive for work
- How often and how far they drive
- The type of business and what is being transported
- Employee driving records
- Your state and the liability limits you choose
- Your claims history
Because the premium is small compared with a potential lawsuit, many agents recommend choosing higher limits.
How to Buy HNOA Coverage
- List every way vehicles are used for work. Include rentals, employee cars, volunteer drivers and occasional errands.
- Ask about adding it as an endorsement. Adding HNOA to an existing general liability or business owners policy is often cheaper than a standalone policy.
- Collect driver information. Insurers may ask how many employees drive and request their records.
- Set a written driving policy. Require employees who drive for work to carry personal auto insurance with reasonable limits and to report accidents promptly.
- Compare quotes. Get prices from at least two or three insurers, or use an independent agent who handles commercial lines.
The U.S. Small Business Administration also offers a useful overview of the main coverage types in its guide to business insurance.
Frequently Asked Questions
Is hired and non-owned auto insurance required by law?
HNOA is generally not required by state law. However, clients, landlords, lenders and event venues may require it in their contracts, and going without it leaves your business exposed to lawsuits.
Does HNOA cover employees who use their own cars?
Yes. The non-owned portion protects your business when an employee causes an accident while driving a personal vehicle for work. The employee’s own auto policy usually pays first.
Does HNOA cover rental cars?
The hired portion covers liability when your business rents or borrows a vehicle. It does not pay for damage to the rental car itself, so consider the rental company’s damage waiver or a corporate card benefit.
Final Thoughts
Hired and non-owned auto insurance is a low-cost way to protect your company from one of the most common and expensive types of lawsuits: a car accident that happens while someone is working for you. If anyone drives for your business in a vehicle you do not own, talk to a licensed agent about adding HNOA before an accident forces the question.
