Renting a Car

Business entity automobile liability exposures – what is hired and non-owned auto liability?

Hired automobile coverage – when an owner or an employee drives a rented, hired, or borrowed vehicle.

Non-owned auto coverage – when an employee drives their own personal vehicle on company time for company business.

If the business entity does not own vehicles in the entity name, the hired and non-owned auto liability coverage can be added to the business entity’s business package or general liability policy.

As a businessowner, you can become legally liable for the actions of your employees.  If you are held accountable, it is important to understand your exposures to loss and to be sure you are adequately protected.

Employees who operate their own vehicle present potential loss exposures to you while they are driving their own vehicles. Exposures to loss you may not think of such as employees running bank errands,  post office drop off, picking up a client, picking up office supplies and any other errands the employee is instructed to perform while on company time, using their own vehicle.

Although the employee would maintain their own personal automobile insurance, it is hard to force the employee to maintain adequate limits that are affordable to them.  It is likely that the loss to another as a result of an employee-related automobile accident would exceed the employee’s personal auto liability limits.  The claimant and their attorney will be smart enough to bring suit against the employer organization for the limits in excess of the limits they have exhausted under the employee’s personal auto policy.

The hired and non-owned auto liability endorsement will help to defend and protect the entity when the suit arises out of bodily injury or property damage caused by an employee while using their vehicle for company business. The hired auto liability will replace the liability coverage offered at the rental car company when an employee is renting a vehicle on company time.

The cost associated with this coverage is minimal and should be added to all business auto or general liability policies to protect and defend the entity for employee related personal auto lawsuits while the employee is using their vehicle for company business, or renting a vehicle on company time.

Roseanne Gedman, CPCU, CRM, CIC

Schechner Lifson Corporation