Hired & Non-Owned Auto: The Coverage Every Arkansas Contractor Forgets
Updated: 7 days ago
Hired and non-owned auto (often shortened to HNOA) covers your business when a vehicle you don't own is used for your work: an employee's car, a subcontractor's pickup, or a rented truck. Many Arkansas contractors don't have it, or don't know whether they do.
What hired and non-owned auto covers
The coverage has two parts:
Hired auto covers vehicles your business rents, leases or borrows, such as a rented box truck for a one-day haul or a loaner while your truck is in the shop.
Non-owned auto covers your business when vehicles owned by someone else are used for your work, such as an employee's car on a supply run or a subcontractor's pickup on the way to your job.
It's liability coverage. It pays for injuries and damage your business is responsible for. It protects your business, not the driver personally, and it doesn't replace the employee's or subcontractor's own auto insurance.
Why a commercial auto policy may not be enough
Many small business auto policies only cover the vehicles listed on them. When someone uses a vehicle that isn't on your policy for your work and causes an accident, the injured person can sue your business too. Without HNOA, your business may have no coverage for that claim.
The driver's own policy may not help either. Personal auto policies may exclude or limit business use, and a subcontractor's policy protects the subcontractor first.
Example (an illustration, not a real claim): a subcontractor drives his own pickup from the supply yard to your job and hits another car. The injured driver sues the subcontractor and your business. HNOA is what responds for your business's share.
What it doesn't cover
Damage to the rented or borrowed vehicle itself. That needs hired physical damage coverage, a separate add-on, or the rental company's damage waiver.
Vehicles your business owns. Those belong on your commercial auto policy.
The driver's own injuries or their personal liability outside your business.
How to add it
If you have commercial auto: HNOA is usually added to that policy.
If you don't have commercial auto: some insurance companies let you add HNOA to a business owner's policy or general liability policy.
The cost depends on your trade, the number of employees, how often others drive for you, and your claims history. Ask your agent for the limit too. A low HNOA limit may not match the liability limits on the rest of your policies.
Which contractors need it
If anyone drives a vehicle you don't own for your business, you probably need it. That includes:
Roofers, framers, general contractors and remodelers
Electricians, plumbers and HVAC contractors
Fencing, landscaping and concrete contractors
Bridge, pipeline and other heavy construction contractors
Any contractor that rents trucks or equipment haulers, or sends employees on errands in their own cars
You may not need it if you work alone, never use subcontractors, and never rent or borrow a vehicle. Few contractors fit that.
Two questions to ask your agent
Does my policy include hired and non-owned auto?
What's the limit, and does it match my other liability limits?
You can also check your declarations page for "hired auto," "non-owned auto" or similar wording with a limit next to it.
FAQ
What does hired and non-owned auto insurance cover?
It covers your business's liability when a vehicle you don't own is used for your work, such as an employee's car, a subcontractor's truck or a rental.
My subcontractor has his own commercial auto policy. Do I still need HNOA?
Usually yes. The subcontractor's policy protects the subcontractor first. If your business is sued too, HNOA is what covers your business.
Does HNOA pay to fix a rental truck I damage?
No. HNOA is liability coverage. Damage to the rental itself needs hired physical damage coverage or the rental company's waiver.
Can I get HNOA without a commercial auto policy?
Often. Some insurance companies let you add it to a business owner's policy or general liability policy.
Do electricians, fencing or bridge contractors need HNOA?
If employees or subcontractors ever drive their own vehicles for your work, or you rent vehicles, yes. The need comes from how vehicles are used, not the trade.
Not sure whether your policy includes hired and non-owned auto? Call City Insurance and Financial Services at (763) 582-1888 or contact us. Related: whose policy pays when a subcontractor's truck causes damage and certificates of insurance for contractors.
City Insurance and Financial Services, Minnetonka, MN.
Comments