Hired and Non-Owned Auto
Liability coverage for vehicles the insured rents, hires, or borrows, and for employee-owned vehicles used for business purposes.
What It Is
Hired and Non-Owned Auto coverage provides liability protection for two categories of vehicles: hired autos, which are vehicles the insured rents, leases, hires, or borrows; and non-owned autos, which are vehicles owned by employees or other individuals that are used for business purposes with the insured's permission.
This coverage is typically provided as part of the Business Auto Policy (BAP) using symbols 1 (any auto), 8 (hired autos), and 9 (non-owned autos). It can also be added to a CGL policy by endorsement in some cases, though this is less common. The standard CGL policy excludes auto liability entirely (Exclusion g), making separate auto coverage essential.
Hired and Non-Owned Auto coverage is the insured's vicarious liability coverage for the use of vehicles it does not own. It does not cover the vehicle itself (physical damage) or the driver's personal liability — it covers the business entity's liability arising from the use of the vehicle for business purposes.
Why It Matters for Brokers
Many commercial clients, particularly professional services firms, consulting companies, and businesses without owned fleets, believe they do not need auto coverage because they do not own vehicles. This is incorrect. If any employee ever drives their personal car to a client meeting, delivers documents, or runs a work errand, the business has non-owned auto exposure. A serious accident on a business errand can generate a lawsuit naming the employer, and the CGL policy will not respond due to the auto exclusion.
Real-World Example
An accounting firm with 25 employees and no owned vehicles does not carry a Business Auto Policy. An associate drives her personal car to a client's office for an audit. On the way, she causes an accident resulting in $430,000 in bodily injury to the other driver. The injured party sues both the associate and the accounting firm. The firm's CGL policy denies the claim under the auto exclusion. The associate's personal auto policy pays up to her $100,000/$300,000 limits, but the firm has no coverage for the excess $130,000 judgment. A Non-Owned Auto policy with a $1M limit would have cost the firm approximately $800 per year.
Common Mistakes
- 1Assuming clients without owned vehicles do not need auto liability coverage — non-owned auto exposure exists whenever employees drive personal vehicles for business.
- 2Not verifying that the Business Auto Policy includes symbols 8 and 9 for hired and non-owned auto, especially when the client also owns vehicles.
- 3Placing hired and non-owned auto coverage on the CGL instead of the BAP when the client should have a standalone auto policy with proper UM/UIM coverage.
How brokerageaudit.com Handles This
Policy Checker identifies auto liability coverage and verifies that hired and non-owned auto symbols (8 and 9) are included. It cross-references the client's employee count and business type to flag accounts where non-owned auto exposure exists but coverage is not in place. COI Manager includes the auto coverage section on ACORD 25 certificates and verifies that hired and non-owned auto status is accurately represented.