Commercial Vehicle Insurance: What is Non-Owned Liability Coverage?

Do you or your employees use personal vehicles to perform company business? You probably have commercial auto insurance for any vehicles that the business owns, but what if you or an employee gets into an accident while driving a personal vehicle for business purposes? In these cases, the business can be held accountable and sued for damages, and your standard commercial vehicle coverage (if you have it) or the driver’s personal auto insurance may not provide adequate coverage!

What is a non-owned automobile?

A non-owned automobile is a vehicle that is used to perform business activities, but is not owned, leased, hired, rented or borrowed by the business. In general, this means any employee-owned vehicle that is driven by the employee for business purposes. If you have employees who use their own vehicles to perform tasks on behalf of your business, your business—you—can be held liable for any damages they cause.

What about the driver’s personal auto insurance?

A personal auto insurance policy might cover claims related to business use of the vehicle. But some insurance companies entirely exclude business use from personal auto coverage. Regardless, business owners must have insurance that at least provides coverage for claims that exceed the limits of the driver’s personal auto insurance. And most businesses that utilize employee personal vehicles will need commercial auto insurance that provides coverage when the employees’ personal auto policies exclude business use.

What type of commercial vehicle insurance do I need for non-owned vehicles?

A basic commercial vehicle insurance policy only covers employees while they are operating company-owned vehicles. You need additional coverage to make sure your business is protected when you or your employees drive personal vehicles for business use. This is called non-owned auto liability insurance.

Non-owned auto liability insurance protects your business if you are sued as a result of a car accident that you or your employee has while driving a personal vehicle for business purposes. It covers bodily injury and property damage caused by a non-owned vehicle that is being used to perform activities for your business. You can add non-owned auto liability coverage to your standard commercial auto insurance policy. If you do not have a commercial auto policy (because your business does not own any vehicles), you can add non-owned auto liability coverage to your commercial general liability policy.

If you or any of your employees drive personal vehicles for business, you need additional coverage to make sure you and your employees are protected. Without it, both you and the driver could be subject to large financial losses. Do you have appropriate commercial auto insurance? Have you considered the risks of driving personal vehicles for business purposes? Might you need to add non-owned auto liability protection to your commercial auto insurance policy?