Many small businesses consider the office to be wherever the work is. This requires travel, often by car. It doesn’t matter if you or your employees own your vehicle, if your company has company cars, or if you hire a car to travel, it can be difficult to determine the right type of commercial auto insurance to protect your business.
You should be aware of two types of automobile insurance: non-owned and hired auto. These can be added to your general liability insurance policy as endorsements.
Insurance coverage for a hired auto
Three types of insurance policies may be available if an employee, employer, or you are involved in an accident with a rental car. The driver’s auto liability coverage is still in effect, as though she or he were driving their own car. In other words, the employee is personally responsible for any injuries or property damage caused by an accident.
Drivers may also be covered for rental car physical damage under their personal auto insurance policies. This would include any damage to the car. Some “comprehensive” or “limited” personal insurance policies do not include rental car coverage.
The second is the rental agency’s liability and physical damage coverage. This coverage is available at the time you rent the car.
Third, there is hired automobile coverage. This coverage protects your company from lawsuits that may result from an accident.
Hired auto insurance does not cover liability for your company, so it is a good idea either to make sure that the driver has car physical damage coverage or to buy the rental agency’s coverage whenever you rent a car.
Non-Owned Automobile Insurance Coverage
Non-owned auto coverage is a good option if you or your employees drive personal vehicles for business purposes. This insurance covers your company from lawsuits that could arise if an employee causes an accident while driving for company business.
The driver’s personal insurance will still apply if he is sued. Additionally, any damage caused by an accident should be covered by the driver’s auto property damage insurance. Non-owned auto coverage protects your business in the event that the other party to the accident files a lawsuit against you.
What do I need it for?
Some clients might require that your company have auto liability coverage to protect them against liability from an accident involving their vehicle or any of your employees. This coverage is typically required by contracts that say: “Contractor shall have bodily injury, property loss, and automobile contractual liability coverage for non-owned, owned, and hired autos with a single limit of liability not less than $1,000,000 for each accident.”
Even if clients don’t need it, non-owned and hired auto coverage can be a smart decision. Your company could be responsible for any excess money incurred by employees who are involved in an auto accident while working or driving in your company’s vehicle. There is always the possibility that your company will be sued.
These types of claims can be costly, but the cost to protect your business with non-owned and hired auto insurance is usually less than $150 per annum.