When does a Business need Hired and Non Owned Auto Insurance?

Hired and Non Owned Auto Insurance is a type of insurance policy that many businesses need and far too many fail to secure. According to the International Risk Management Institute, Hired and Non Owned Auto Insurance is defined as; ‘an auto that is used in connection with the named insured’s business but that is not owned, leased, hired, rented, or borrowed by the named insured’. In layman’s terms this is an insurance policy for a business when an employee of that business uses a vehicle for business purposes that is not owned by that business. This could be an employee driving their personal car for business purposes or it could be an employee driving a rental car while travelling to a conference representing the business. The insurance policy will cover bodily injury and property damage to third parties damaged by an accident that is the fault of your employee. This policy can be purchased as a standalone policy or as an add on to your commercial auto or general liability insurance policies. Here are some things you need to know about this coverage if you own a small business and have employees who use vehicles the business does not own.

You can purchase it as a standalone policy, or you can add it on as a rider to your General Liability Insurance.

What exactly does Hired and Non Owned Auto Insurance Cover?

Hired and Non Owned Auto Insurance covers some damages for cars that employees of your business use but the business does not own those cars. These vehicles include rental vehicles, leased vehicles, and employee personal vehicles. The policy covers specifically the damage caused to third parties, but not always the damage to the vehicle your employee is driving.

Examples of when you need this coverage

You send an employee on an errand to pick up supplies in their own vehicle.
An employee rents a vehicle on a business trip.
You send a limo to the airport to pick up an important client.
An employee runs out to get coffee or pick up lunch for everyone in the office.

What is not covered under a Hired and Non Owned Auto Insurance Policy?

A Hired and Non Owned Auto Insurance Policy does not pay for physical damage to your employees vehicle. That damage would be covered by the employees personal auto insurance policy. It also will not pay for the repair of a rental vehicle that is damaged by in an accident that is caused by your employee. It does not cover accidents that occur during a commute to work, unless the employee is using a vehicle rented by the business. Another scenario that is not covered by a Hired and Non Owned Auto Insurance Policy is when an employee is running a personal errand during work hours, but they are not doing business operations.

What are the differences between Hired and Non Owned Vehicles

Hired Vehicles refer to car services like a taxi or limousine and rented vehicles your employees use for business purposes. Non Owned Vehicles refer to vehicles that are used by your employees that are not owned by the business. The most common example of this is an employee using their personal car for business related travel.

April is Distracted Driving Awareness Month

Here are 10 tips from experts about how to combat distracted driving.

Hang up and drive:

According to AARP, the best way to combat distracted driving is to simply put down the phone and drive. Leave all phone calls for when you are at a place where you can safely park your car.

Wear your Seatbelt:

The first thing anyone should do when they sit down in to a car is to put on your seatbelt. Even if you do every thing in your power to keep yourself from getting distracted, you can not prevent other people from driving distracted and harming you.

Know your technology:

This multitasking technology is about convenience, not safety. According to the National Safety Council, cell phones are not the only distraction drivers are facing on the roads today.

Designated Texter:

Select a friend to be your designated texter while you’re behind the wheel. According to the organization Digital Responsibility, Designated Drivers have helped decrease the amount of drinking and driving cases. The same concept can help with distracted driving.

There are three types of distractions:

According to the website DMV.org there are three types of distraction while driving: Manual, Visual, and Cognitive.

Skip the Drive-through:

According to an article in Consumer Reports it is important to skip the drive through. Eating while driving can be just as distracting as texting and driving.

Attend to the kids before getting behind the wheel:

Children can distract you from the road. Whenever your children are having a tantrum on the road it is important to first pull to the side of the road before dealing with any childs needs.

Put up makeup on at home:

Applying makeup while behind the wheel is as distracting as anything someone can do while driving. Taking the proper amount of time to apply makeup before getting behind the wheel is essential to preventing distracted driving.

Talk to your teens about distractions:

Teens today have grown up with cell phone usage as a part of their existence. Talking to them about the need to put down the phone while driving is important.

Just talking can be a distraction:

It is normal to talk with a friend or family member when behind the wheel, but limiting the amount of attention you put on the conversation is important to limit distracted driving.

Safe Drivers

How to choose safe drivers for your Small Business?

Some businesses are forced to require at least some of their employees to drive as part of their job. This can be true for a landscaping company who drives to many third party locations throughout the day, but it can also be true for a restaurant who has the assistant manager run to the grocery to purchase snacks for the staff. No matter what the scope of your employees driving is in relation to their overall job, it is important to have a plan for how you are going to make sure they are safe drivers. In order to do this you must have a detailed plan in place to keep your employees and your vehicles safe while they are out on the road. Here are five ways to ensure your business is doing everything it can to protect your business.

Interstate safe drivers

Consistency

You should strive for consistency in everything related to your vehicle fleet. This should be the same if you have two employees who drive for your business occasionally or 200 drivers out on the road at any given time. You should train all drivers the same way and hold everyone to the same standards throughout the length of their employment with your organization. Consistency is the best way to ensure your business is employing safe drivers.

Verify all records

It is crucial to verify any record your employee gives you about themselves. You should hire people you trust, but you must verify what they tell you in order to ensure your trust is not being violated. This goes for their past work history, their certifications, as well as their driving and criminal records.

Conduct thorough Background Checks

If you are going to be trusting your employees with expensive equipment than you need to run a thorough background check on them at the time of hire and periodically throughout their employment. How in-depth this check is will be different for every business depending upon the scope of your work and the experience of your employees. Digging deeper in to your employees background is always better than not exploring their history far enough.

Pull Motor Vehicle Records Yearly

Before anyone uses a vehicle as part of their job, you need to have a look at their motor vehicle record. This is a requirement for many insurance policies and failure to do so can cause your commercial auto insurance premium to increase or your business to be dropped from coverage entirely in some instances. These should be pulled yearly to ensure nothing has come up that would disqualify any of your employees from continuing to be qualified as a safe driver. You can never expect your employees to notify you of every traffic violation they experience while not on the job. The only way to know if they are continuing to be a safe driver is to look at their driving record.

Safe Drivers Test

Periodically testing your employees is crucial to ensuring they are taking the safety procedures you have in place seriously. This test can be as informal as going for a ride along with the driver occasionally to a formal written exam. The depth of this test will depend upon how much the employee uses a vehicle as a part of their job, but some type of test should be a part of your overall vehicle safety program.

Commercial Auto and Inland Marine

Where does the grey area exist?

If you own a business and that business owns and operates vehicles, you need some form of Commercial Auto Insurance. If you rent vehicles or have employees use their personal vehicles for work purposes, you need to secure a hired and non-owned auto policy. If you have a trailer where you move specialized equipment to third party locations’ than you need an inland marine insurance policy. When you have a claim that involves a vehicle there becomes an issue of which policy kicks in to cover what is damaged. This is a time when partnering with an experienced independent insurance agent and purchasing all policies from one carrier can benefit your business immensely. Here are several tips to help you make sure all of your vehicles and equipment are properly insured.

First you need to know what exactly is covered under each policy.

Commercial Auto

A Commercial Auto Insurance Policy will cover vehicles your business owns that are used for business purposes. If you have a personal vehicle that you also use for business purposes, you still need to buy separate personal and commercial auto insurance policies for that vehicle. If you only have a personal policy and you use the vehicle for business purposes, the liability is taken on by the business. The personal auto policy will not cover the damage to third party vehicles that are damaged in an accident you cause. If you do use your personal vehicle for business purposes, it is important to speak long and honestly with your independent insurance agent about what exactly you use the vehicle for and how best to insure it.

Hired and Non-owned Auto

If you have employees who drive rented vehicles when they travel or who use their personal vehicle for business purposes, you have a need for a Hired and Non-Owned Auto Policy. This policy may be in place of a Commercial Auto Policy or in addition to it. When an accident occurs that is the fault of your employee, if they are in their personal car, the personal insurance policy will cover the damages to the employees vehicle. Now the property and bodily injury liability to third parties is the liability of the business. This is why you need to strongly consider this policy for your business. One accident that causes a car to be totaled and a third party to spend a week in the hospital can easily result in your business being responsible for tens of thousands of dollars. If you do not have the ability to cover these costs you need an insurance policy to protect your business.

Inland Marine

An Inland Marine Insurance Policy is a policy you would purchase in addition to a Commercial Auto Policy in order to protect specialized equipment that is commonly in transit. A common business who needs this coverage is a landscaping company. A Commercial Auto Policy will coverage the vehicle your business owns and operates. It will also cover your business for any liability you face to third parties damaged by an accident caused by your business. If you have specialized equipment that is transported on either a trailer connected to your vehicles or in the back of a truck, you need to purchase an Inland Marine Policy.

What can you do as a Business Owner?

Partner with an independent insurance agent

Partnering with an independent insurance agent is always the best place to start when you are considering purchasing commercial insurance for your business. This is best for you because an independent agent is not restricted to one or a select few carriers. Typically an independent agent partners with anywhere from 10 to 40 carriers. They can use these relationships to force carriers to compete for your business. This will allow you to get better coverage at the lowest possible rate.

Talk with your agent extensively

No matter if you decide to partner with an independent or captive agent, you need to take the quoting process seriously. If you fail to disclose something to your agent or carrier during the quoting process, it can create an enormous headache for you at a later date. The work case scenario would be that your carrier drops you from coverage because of the failure to disclose something about your business. This can cause you and your agent to have to find a new carrier to cover your business mid term. If this process does not go smoothly it can cause you to have a lapse in coverage. Many carriers will not cover a business who has had a lapse in coverage and this may force you to have to buy some coverage’s from the state provider. The state provider is almost always more expensive than buying coverage out on the open market.

Express your comfort with risk to your agent

Insurance agents talk to many business owners throughout each work day. If they are a nationwide agency, they may speak with a restaurant owner from Los Angeles, a dairy farmer in Wisconsin and a commercial fisherman from New Orleans all before lunch. Each of these businesses faces enormously different risks and the people who own these businesses may have dramatically different expectations from their insurance agent. The only way to be for certain that your agent is looking for what is most important to you is to directly tell them. If you value price above all else, let them know. If you want to insure your business to the teeth, let them know this as well. The more you tell your insurance agent, the less likely you are to have problems with that agent.

Listen to your agents recommendations

Listening is a skill most people could do much better. Business owners especially are confident people. They would not have branched out on their own to start a business without confidence, but that confidence can be a hinderance if you think you know more about every aspect of your business than the experts you partner with. If you find an independent agent with whom you trust and you have a detailed conversation with them, they should be able to find the best package of coverages to fit the needs of your business. If you go through this process listen to the insurance professionals. They interact with business owners not only when selling them a policy, but also when they have to use that policy because something bad has happened to them. If you trust your agent, they should only offer a policy that you absolutely need. If they recommend it, it is more than likely in your best interest to listen to them.

My employees drive their own car for work, do I really need separate Commercial Auto Coverage for their Cars?

Won’t their personal insurance plans cover any wrecks they have?

The answer to this question is yes and no. Like most things in life it depends. If your employees drive their personal cars for business operations, you do not necessarily need a full commercial auto insurance policy. There is another policy that will cover just this situation. The coverage is called Hired and Non-Owned Auto Coverage. This coverage is specifically for businesses who have employees who either use their personal car for work or drive a rented car at some time for business purposes.

Commercial Auto Insurance

Hired and Non-Owned Auto Liability covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles of your employees. In most cases it does not pay for the physical damage to the vehicle itself; that’s covered by the owner’s insurance. Although this option is available on some policies.

Whether you realize it or not, as a business owner, you at least occasionally find yourself in situations where this coverage is needed. Errands and rental situations always come up. Just a few examples of when there is a need for this coverage include: When you send an employee to pick up lunch, renting a car while on a business trip, to impress a client, you send a limo to pick them up, or an employee runs to pick up office supplies at the local Sam’s club.

So the answer to the original question: Won’t their personal insurance plans cover any wrecks they have? It may cover damage to their vehicle, but in most cases it will not cover any liability to the other person who’s may be injured or whose car has been damaged. The reason for this is because the only reason the employee is driving at the time of the wreck is because of the directions of the business. Had the person not been working there is no reason to believe the person would have been behind the wheel at that place in time. For that reason, the liability is the responsibility of the business and not the individual employee. This is why it is important to have the right form of commercial auto insurance.

For this reason, it is crucial to secure hired and non-owned auto coverage for your business. Not just a commercial auto insurance policy. It can be added to most business owner’s policies for a minimal amount. No matter what the amount of the premium, it will most certainly be less than the damage to your business if an accident happens and you are not covered. Uncovered losses involving a vehicle are the types of losses that some businesses are not able to survive.

5 Myths about Commercial Auto Insurance.

Commercial Auto Insurance can be a tricky coverage for many business owners. Many think it is just like their personal auto coverage and many think it is an all encompassing policy, meaning if something happens to my business car I am covered. Right? That would be wrong and here are five examples of incorrect assumptions, many business owners make regarding their commercial auto Policy.

All of My Employees Are Covered While Driving Company Vehicles

It depends on the policy and the carrier. Some policies require you to name drivers. In some cases companies will exclude some of your employees because of their driving record. Most all carriers have an option to include all drivers. Like in all situations, it is best to consult with your agent about the limits and exclusions to your policy. That way you can be crystal clear what is and is not covered under your particular commercial auto insurance policy.

I Can Cancel My Policy During the Off Season to Save Money

You can choose to cancel your policy in the off-season if your business is seasonal. It can save your business some money on premium if you are able to store your vehicle indoors and in a secure place. If you are planning on doing this you need to be aware that the vehicles are still at risk. If there is damaged you are liable for the repairs. This damage can come from via natural causes like wind and hail damage. Damage can also come from things like vandalism or theft. If you experience any of these problems while not covered you or your business will be responsible for damages.

The Entire Premium is Due Up Front

Most companies allow commercial policies to be paid in monthly installments. Most refer to these policies as Pay as You Go. If you have the ability to pay the full years amount up-front, many carriers do offer a discount for doing so.

Bundling is Always Cheaper

In many cases this is the case, but it is always a good idea to shop your policy around just in case. Some carriers specialize in certain coverages and some carriers change their appetite for certain industries and types of coverages. This means that if your carriers has recently taken a loss in one industry or in one type of coverage, they may not be as excited about quoting your policy. This may cause them to offer a higher rate for this one policy or for your industry. For this reason, it is important to partner with an agency who has partnerships with many carriers and can quote your policies as a bundle and individually.

If you are self employed you don’t need Commercial Auto Insurance

I drive a company car, so I don’t need my own auto insurance.
The car may be covered, but you may not. Even if your employer has coverage that provides some liability protection, it may not be enough, or you could be sued personally in a bad accident. Also if you borrow or rent a car, you should have your own protection. Being listed on another auto policy isn’t enough to protect you because business use is different. You need to purchase special protection.