by: John Penton
One of the main reasons that business owners are often left feeling skeptical and oversold when purchasing insurance products is due to the seemingly endless coverage offerings and unfamiliar terminology. A good example of coverage that is often overlooked or misunderstood is Hired and Non-Owned Auto Liability.
Hired and Non-Owned Auto Liability
Many trucking companies assume that they already have Hired and Non-Owned Auto Liability due to the liability limit listed on their Policy or Certificate of Insurance. However, Hired and Non-Owned Auto liability is not required by the FMCSA in order to be a legally registered carrier. Rather, it is considered an “optional” coverage by most insurance companies. Therefore, it is at the discretion of your insurance agent to offer the coverage.
What Does Hired Auto Liability Cover?
Hired Auto Liability coverage is for an auto owned by someone other than yourself that is hired or rented on a short-term basis. It is often referred to as an “if any” coverage due to the incidental nature of how it applies.
Example: You are hauling a load from Minnesota to Pennsylvania and your truck breaks down halfway there. It will be in the repair facility for days, but you still need to get the load to its final destination by the agreed upon time. You have a trucker friend that happens to be passing by the location of your disabled vehicle, and he/she agrees to finish hauling the load to its destination on your behalf.
Your friend’s truck is considered a “hired auto” and now will have liability coverage afforded from your policy. This coverage includes property damage and bodily injury to a third party, as well as a duty to defend with any litigation proceedings.
What Does Non-Owned Auto Liability Cover?
Non-Owned Auto Liability coverage is for autos that are not owned or hired by the business, but that are still used by the driver for business purposes.
Example: Your business is throwing a lunch BBQ at the office for an employee anniversary, but you realize that you didn’t buy napkins. You ask your receptionist to run to the store to purchase more napkins in his/her personal auto.
The receptionist’s car is being used within the scope of business operations and is now considered a “non-owned” auto. Should the receptionist be involved in a liability claim, there would be coverage if you have Non-Owned Auto Liability on your policy. Legal representation would also be included with this coverage.
Hired and Non-Owned Auto Liability limits tend to match that of your Auto Liability limit and can typically be endorsed onto the policy at any time. The cost for these coverages can be very minimal, depending on the insurance provider. Our office provides complimentary policy reviews for all prospective clients, so please reach out to us today to ensure that your trucking business is properly insured!