Even if your HOA or property management company doesn’t own any vehicles, you probably use vehicles for work-related reasons occasionally. If a crash occurs and you don’t have the right commercial auto insurance coverage, you could end up with uncovered costs. Hired and non-owned auto coverage provides important coverage for HOAs, COAs, landlords, and other property management companies that sometimes use personal or rented vehicles. 

What is hired and non-owned auto coverage?

There are two main categories of car insurance: personal auto insurance and commercial auto insurance. People buy personal auto insurance for the cars they own and businesses secure commercial auto insurance for their fleets. 

This sounds simple enough, but there’s often a gray area. For example, many people use their personal cars for work purposes from time to time. If someone suffers a crash while using a personal vehicle for work purposes, the liability situation can get complicated, as the personal policy may not provide adequate coverage. Commercial general liability insurance policies also typically exclude auto crashes.

Hired and non-owned auto insurance provides coverage for personal cars that are used occasionally for business purposes. Coverage can also apply to leased or rented vehicles. These policies provide the bodily injury liability and property damage liability coverage businesses need.

As with other types of insurance coverage, you will need to complete an application and pay a premium. How much hired and non-owned auto insurance will cost depends on several factors, including your risks and coverage limits. If your policy has a deductible, this is the amount you’ll need to cover out of pocket if there is a claim. 

Your business or HOA could be sued

Imagine you’re driving your personal vehicle to pick up some things for your HOA. On the way back to the property, with a car full of business supplies, you are distracted for a moment and rear-end the car in front of you. Both cars are damaged and the other driver complains of back pain. Since you have personal auto insurance coverage for your car, including both liability and collision insurance, you assume you’re covered. Then you find out the other driver is naming your HOA in a lawsuit. As your personal auto insurance policy doesn’t cover the HOA and your general liability insurance policy doesn’t provide coverage for auto crashes, your HOA has to face the lawsuit without coverage.

When someone is engaged in work-related activities at the time of an accident, the business or organization may be liable. To make matters worse, people may be more likely to sue for a large settlement if they think the organization has deep pockets. 

Who needs hired & non-owned auto coverage?

According to the Insurance Information Institute, you may need hired and non-owned auto insurance if you use personal vehicles for activities like client meetings, business errands, and deliveries. 

Larger HOAs and COAs can often benefit from this coverage. It’s common for board members and employees to use their personal vehicles for official business – and accidents can happen. When a crash results in injuries, medical bills, lost wages, and long-term disability, large jury awards are possible. Think about how your HOA would deal with such a lawsuit without insurance coverage. If it would be a problem, you should secure appropriate insurance coverage.

Landlords and property managers may also benefit from hired and non-owned auto insurance. When deciding whether coverage is necessary, consider how you use personal vehicles for business purposes.

Simply commuting to work shouldn’t be a problem, but if you use personal vehicles for other work-related tasks, you might have an insurance gap.

hired and non-owned auto insurance
If your HOA needs a car for running errands or other official business, you could benefit from the hired and non-owned auto insurance 

Who doesn’t need non-owned liability insurance?

Hired and non-owned insurance isn’t necessary when other insurance policies provide sufficient coverage. If you don’t need this coverage, cutting it can be a useful way to reduce your overall insurance costs.

For example, if your business or organization owns the vehicles that you use for work purposes, you will presumably have commercial auto insurance policies for those vehicles, meaning you shouldn’t need a hired and non-owned policy. If individuals only use their personal vehicle to commute, a hired and non-owned policy shouldn’t be necessary, as personal auto insurance usually covers commutes, whereas a hired and non-owned policy would not provide coverage.

Minimizing your risks

Consider making hired and non-owned auto insurance part of your overall risk management strategy. Also, keep these best practices in mind:

  • Be careful about who drives for your organization. If someone causes a crash, your organization could be on the hook for the damages. 
  • Create clear policies regarding vehicle usage. Your policies should state whether individuals are allowed to use personal vehicles for work purposes and under what circumstances. These policies should be consistent with your insurance coverage to prevent coverage gaps.
  • Promote safe driving. Avoid policies that encourage distracted driving, speeding, or other reckless behaviors. Your priority should be safety.
  • Maintain all vehicles. A lack of maintenance can contribute to crashes. If you are using personal vehicles for business, keep them in good condition. 

Protecting your organization

You don’t want to pay for coverage you don’t need – but you don’t want to leave yourself vulnerable to insurance gaps, either. Before deciding whether to buy hired and non-owned auto coverage, review your vehicle usage and insurance policies to determine whether you have uncovered exposures. If the individuals at your organization frequently use their personal vehicles to transport supplies or clients, you may need to secure coverage.