Every driver needs car insurance of various shapes and sizes. If a business is the owner, then they will likely need commercial auto insurance. However, someone who drives a car they personally own might also need this coverage, too. Here’s what you need to know when you need to insure a personal car under a commercial auto policy.
What is commercial auto insurance?
Most private car insurance will not cover someone who drives for business. Commercial auto insurance is often the solution. It applies to special liability risks businesses face when someone drives under their banner. A wreck could cause a business a significant financial loss. Commercial auto policies can remedy that.
There are times when someone might drive their personal car for business. They might make deliveries, haul cargo or drive on official business. In these cases, they will likely need commercial auto coverage. To obtain this coverage, hired/non-owned auto coverage will need to be part of your policy.
Understanding Hired/Non-Owned Auto Coverage
A business does not have to own a fleet of vehicles to need the protection of commercial auto insurance. Often, businesses owners or employees drive their personal while on duty. The business will still need the liability protection that commercial auto policies provide. With hired/non-owned auto liability coverage on your policy, you can receive coverage.
For example, real estate agencies often allow employees to drive personal cars when showing properties. If that driver is at-fault for an accident, then their personal auto liability coverage will likely not apply. The business will have no coverage either if the party harmed by the driver’s mistakes sues it. Those that have hired/non-owned liability coverage can ensure that they can repay the money required by such claims.
Hired/non-owned liability policies don’t apply only to employee-owned vehicles. If you rent vehicles for special purposes, such as moving or special events, then a hired/non-owned policy will also apply.
There are some restrictions to hired/non-owned liability policies, however. They will not cover the physical damage of a non-owned vehicle. Nor will they cover employees who drive their personal cars during their off hours. Therefore, employee drivers will still have to carry personal auto insurance. Its own liability coverage just won’t apply at the same time as hired/non-owned coverage. You might also need to buy supplementary coverage for any vehicles that you rent.
Sometimes, you can buy hired/non-owned liability coverage as part of a general liability insurance policy. However, it usually is best to buy as part of a commercial auto policy if you will use both business-owned and private vehicles in your driving services.