Hired and Non-Owned Auto

Overview

Hired and Non-Owned Auto coverage protects businesses against liability arising from the use of vehicles they do not own. "Hired auto" refers to vehicles the business rents, leases, or borrows. "Non-owned auto" refers to vehicles owned by employees or others that are used for business purposes. This coverage is critical for businesses that rely on employees driving their personal vehicles for work tasks.

How It Works

Many businesses do not own a fleet of vehicles but still face auto liability exposure. Employees run errands, make deliveries, visit client sites, or commute between offices using their personal cars. If an employee causes an accident while on business, the employer can be held vicariously liable.

Hired and Non-Owned Auto coverage addresses this exposure through two components:

• Hired Auto: Covers liability when the business rents or leases a vehicle. This includes rental cars for business travel, short-term equipment rentals, and leased vehicles that are not on the company's owned auto policy.
• Non-Owned Auto: Covers the business's liability when an employee uses their personal vehicle for business purposes. This does NOT cover the employee's own damages — that falls under their personal auto policy. It covers the employer's vicarious liability.

This coverage can be obtained as:

• An endorsement on a Business Auto Policy (BAP) using symbol 1 (any auto) or symbols 8 and 9 (hired/non-owned)
• An endorsement on a CGL policy (less common, more limited)
• A standalone Hired and Non-Owned Auto policy (for businesses with no owned vehicles)

Compliance Relevance

Hired and Non-Owned Auto coverage is a standard requirement in commercial contracts, especially for service vendors:

• No fleet needed: Even vendors with no owned vehicles should carry this coverage if employees ever drive for business. A cleaning company whose employees drive personal cars to job sites needs Non-Owned Auto coverage.
• Certificate verification: On the ACORD 25, this coverage appears in the Automobile Liability section. The "Hired Autos Only" and "Non-Owned Autos Only" checkboxes should be marked, or "Any Auto" should be selected (which includes both).
• Limit requirements: Hired and Non-Owned Auto limits typically must match the Combined Single Limit required for commercial auto — commonly $1,000,000.
• Gap identification: If a vendor marks only "Owned Autos" on the certificate, they have no coverage for hired or non-owned vehicles, creating a significant gap.

Example

A property management company hires an IT consultant who drives their personal car to various properties for network maintenance. While driving between properties, the consultant runs a red light and causes a multi-vehicle accident. The injured parties sue both the consultant and the property management company's IT vendor. The vendor's Hired and Non-Owned Auto policy covers the vendor's liability for the accident caused by the employee's personal vehicle used for business.