The Importance of Hired and Non-owned Liability Coverage
Photo by Robert Piretti
Whether your organization frequently rents vehicles for business trips or occasionally relies on employee-owned cars for client visits, understanding the intricacies of Hired and Non-Owned Auto Liability Coverage is crucial. From protecting against unexpected collisions to navigating insurance complexities, managing these aspects ensures smooth operations and financial security.
Hired and Non-Owned Auto Liability Coverage Overview:
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Hired Auto Liability Coverage provides coverage for vehicles the organization rents, leases or borrows for business purposes. For example, if the organization rents a car for a business trip or leases a vehicle for a short period of time (30 days or less), hired auto liability coverage can protect the organization in the event of an accident while using the rented or leased vehicle.
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Hired Physical Damage Coverage provides coverage for collision and comprehensive coverage in the event of a covered accident, subject to the policy deductible. Coverage can include collision, hitting an animal, theft or glass breakage.
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Non-Owned Auto Liability Coverage provides coverage for vehicles not owned by the organization and used for business purposes incidentally. This can include vehicles owned by employees who drive for business purposes.
Hired and Non-Owned Auto Liability and Hired Auto Physical Damage coverage is excess coverage over any primary coverage. For non-owned auto liability, the coverage within the policy would be excess to the employee’s personal lines insurance coverage. On the Hired Auto Liability, if insurance is purchased at the rental car company, the Hired Auto Liability and Physical Damage is excess coverage to the coverage purchased at the rental car company.
Recommendations:
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Purchase Physical Damage Only Coverage from the Rental Car Company.
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The Hired Auto Physical Damage coverage provides coverage for Loss of Use and Depreciated Value. When a claim occurs in a rented or leased vehicle, the rental/leasing company will demand payment for the time the vehicle is not able to be rented, due to being in a repair shop, and depreciated value, due to the accident. Policies provide a small limit of Loss of Use and Depreciated Value, and this can result in the organization having to come out of pocket for the amount due. We recommend purchasing physical damage coverage only from the rental/leasing car company to avoid coming out of pocket for Loss of Use and Depreciated Value.
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Using the organization’s credit card to rent the vehicle.
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Some credit card companies have built in coverage of limited rental car coverage. By booking the rental with the organization’s credit card, this adds another layer of protection.
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Renting Vehicles in the Organization’s Name.
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Having the rental vehicle rented in the organization’s name provides a cleaner claim’s scenario.
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Pre-Existing Damage.
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Each employee renting a vehicle should be required to take photos of any existing damage, prior to driving the rented vehicle. This can help prevent claims by the rental car company against the organization.
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Set up an account with specific rental car companies.
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Having an account set up with specific rental car companies can provide ease of employees renting vehicles, as well as risk management control.
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Having a grasp of the ins and outs of Hired and Non-Owned Auto Liability Coverage is crucial for any organization relying on rented or employee-owned vehicles. At the end of the day, it’s all about staying informed to keep operations smooth and finances secure. As businesses grow and travel remains a key part of the picture, knowing the ropes of auto liability coverage ensures that organizations can navigate the road ahead with confidence.
