Commercial drivers come in all shapes and sizes, and the businesses that use them vastly differ as well. While all will need commercial auto insurance, the types of coverage that they need will vary considerably from one business to the next.

One of the most important types of coverage a business needs is auto liability insurance, which is required of most drivers in most states. However, depending on who is driving, and who owns the car they are traveling in, different liability coverage might apply.

There are two types of commercial auto liability insurance: standard & hired/non-owned auto coverage. Each can come as part of your commercial auto plan. However, they will apply in different scenarios, and it’s important that you carry both of them.

Understanding Auto Liability Insurance

Most states use fault to determine who is responsible for paying for the damage done in an accident. As a result, the at-fault driver is usually responsible for paying for the injuries or property damage that they caused to others following a wreck. Both commercial and private drivers are subject to these rules.

If one of your company drivers, while driving on official business, rear-ends another vehicle at a stoplight, then the accident is almost certainly their fault. Therefore, the business’s commercial auto liability insurance will pay for the injuries and property damage that the other driver and their vehicle sustained. However, whether it is standard liability or hired/non-owned liability insurance that covers the cost will depend on who owns the vehicle in question.

When Will Hired/Non-Owned Auto Liability Insurance Pay?

If you or one of your employees are driving your company-owned vehicle on official businesses, then your commercial auto liability insurance will pay on your behalf for at-fault accident costs. However, when an employee is driving their personal car, but doing so on official business, then hired/non-owned auto liability coverage kicks in.

Even though someone might be driving their own car for work, they are still a representative of your company. At this time, their personal auto liability insurance will not effectively cover them. Hired/non-owned coverage enables the employer’s liability benefits to extend to the employee driver, so that they will continue to have appropriate coverage in place. This coverage will address the fact that even though someone caused a wreck in their own car, they were still at work when doing so. Therefore, the business itself might have to take responsibility for the accident.

Hired/non-owned liability insurance is therefore essentially an extension of your overall commercial auto liability insurance. It’s important to carry because you never know when, because you dispatched an employee to do a job on your behalf in their car, you might actually be responsible for the costs of an accident. Talk to your agent to ensure that your policy contains this benefit.

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