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Rented and Personal Vehicles: Are Your Risks Covered?

June 14th, 2019 | Commercial Insurance, Personal Insurance   

Are you familiar with hired and non-owned auto (HNOA) insurance? If your business involves vehicle use in any way, this coverage could be crucial for your operations. Here are the FAQs.

What is HNOA insurance?

Hired and non-owned auto insurance provides coverage if an employee uses a personal or rented vehicle for business purposes. 

If an employee in these circumstances is in an accident, the company for which they were driving could be held liable for damages. HNOA insurance covers this liability.

Who needs HNOA insurance?

Business owners may assume that if their employees don’t use company vehicles, they don’t have to worry about insurance coverage. This isn’t necessarily true. 

The employee’s personal insurance may not always cover the full liability, in which case the litigators may go after the business for which the employee was driving at the time. This makes it important for any business with exposure to this risk to maintain HNOA insurance. 

While HNOA insurance is most commonly associated with food delivery tasks, the need for HNOA goes beyond pizza and sandwich delivery. Home health care providers, consultants, contractors, and anyone else who uses their own vehicles or rented vehicles for business-related tasks or travel have HNOA exposure. 

Of course, a company with a fleet of inexperienced teens delivering dinners will have a higher risk than a small business with two professionals who attend occasional client meetings. Still, the risk is there, and it should be addressed.

What can business owners do to reduce HNOA exposure?

To reduce their risk, business owners can take several steps. First, they can conduct motor vehicle record checks on employees. This task can be completed twice a year to monitor employee driving. Second, business owners can establish guidelines for who is considered an acceptable driver. The employer can use driving experience, age, and driving records as parameters to set these guidelines. 

Modern technology allows for a third method that could be worthwhile for some businesses. This solution is telematics. Using this technology, an employer can monitor the activity of a vehicle and the driver’s performance. The data will reveal whether drivers speed, how they brake, and other information that can be helpful in determining risk. Because they are being monitored, employees may make greater effort to drive safely. Employers can also create reward programs based on telematics data to further incentivize safe driving among employees.

Is HNOA coverage provided by a standard commercial auto insurance policy?

Business owners who have a commercial auto insurance policy may or may not be covered for HNOA situations. Previously, this coverage was often a standard part of commercial auto policies, but the rising frequency and cost of litigation have forced many providers to make it a separate policy. Business owners should check with their carriers to see what coverage is included and what is available.

What’s the next step?

If you’re unsure about your HNOA exposure and insurance needs, contact our office. We can provide a quick review of your policies and risks and make sure you have appropriate coverage.