Hired Auto vs. Non-Owned Auto: Understanding the Difference

When it comes to protecting your business on the road, Commercial Auto Insurance is essential. But what happens when your business doesn't own the vehicle in use? That’s where Hired Auto and Non-Owned Auto coverage come into play. While they’re often bundled together in commercial insurance policies, they serve distinct purposes.

Let’s break down the difference between Hired Auto and Non-Owned Auto coverage — and help you determine which one (or both) your business might need.

What Is Hired Auto Coverage?

Hired Auto insurance provides liability coverage for vehicles that your business rents, leases, or borrows for business use.

Examples:

• You rent a van from Enterprise to deliver products to a trade show.

• Your business leases a car for a month while the company vehicle is in the shop.

In both situations, the vehicles aren’t owned by your company — but are used temporarily for business purposes. If there’s an accident while using these vehicles for work, Hired Auto coverage protects your business from financial liability.

What it covers:

• Third-party bodily injury and property damage (liability only)

• Legal defense costs

  
  

What it doesn’t cover:

• Physical damage to the rented vehicle (unless you add Hired Auto Physical Damage)

• Employee injuries (typically handled under Workers' Comp)

What Is Non-Owned Auto Coverage?

Non-Owned Auto insurance provides liability protection when employees use their own personal vehicles (or vehicles not owned by the business) for work purposes.

Examples:

• An employee drives their personal car to deliver documents to a client.

• A team member runs errands for your business using their own vehicle.

In these scenarios, if your employee gets into an accident, their personal auto insurance is primary. However, if the claim exceeds their policy limits, your Non-Owned Auto coverage steps in as excess liability.

What it covers:

• Excess liability for bodily injury and property damage

• Legal defense costs for the business

What it doesn’t cover:

• Damage to the employee’s vehicle

• Injuries to the employee (again, this would fall under Workers' Comp)

Key Differences at a Glance

Feature	Hired Auto	Non-Owned Auto
Applies to	Vehicles rented, leased, or borrowed by the business	Employee-owned or non-business vehicles used for company tasks
Coverage Type	Primary liability (in most cases)	Excess liability
Covers vehicle damage?	No (unless optional coverage added)	No
Covers employee injury?	No	No
Protects the business from lawsuits?	Yes	Yes

Why Your Business Might Need Both

Many businesses benefit from having both Hired and Non-Owned Auto coverage, especially if:

• Employees occasionally drive their own cars for work-related tasks

• You rent or lease vehicles for short-term business needs

• You want to reduce your liability exposure, even when vehicles are not owned by the company

These coverages are typically added as endorsements to a Commercial General Liability (CGL) or Business Auto Policy (BAP) — and are relatively inexpensive for the level of protection they provide.

Final Thoughts

Hired Auto and Non-Owned Auto insurance might sound similar, but they cover very different scenarios. If your business uses vehicles you don’t own — whether rented or employee-owned — these policies can be crucial to avoiding costly liability claims.

Not sure which coverage is right for your business? Our experienced agents at Insurance Connection can help tailor a policy that fits your specific operations and risk exposures.