Hired and Non-Owned Auto Liability Endorsements

In the world of commercial insurance, a standard Commercial General Liability (CGL) policy contains a significant exclusion: it typically does not cover bodily injury or property damage arising out of the use of automobiles. For many small businesses that do not own a fleet of vehicles, this creates a dangerous coverage gap. This is where Hired and Non-Owned Auto Liability (HNOA) endorsements or policies come into play.

For the Commercial Insurance exam, it is vital to understand that businesses are often held vicariously liable for the actions of their employees. If an employee is running a business errand in their personal vehicle and causes an accident, the business can be sued. HNOA coverage protects the business entity—not the employee—in these specific scenarios. To get a broader view of how this fits into the larger landscape, see our complete Commercial exam guide.

Hired Auto Liability applies to vehicles the named insured leases, hires, rents, or borrows. However, there is a critical distinction for the exam: it does not include vehicles leased, hired, rented, or borrowed from any of the business's employees, partners, or members of their households. Those are specifically categorized as non-owned.

When a business owner rents a car at an airport for a convention, the Hired Auto endorsement provides liability protection for the business if that car is involved in an accident. It is important to note that this coverage is generally excess over any other collectable insurance, such as the insurance provided by the rental agency, unless specifically negotiated otherwise.

Non-Owned Auto coverage is perhaps the most common source of surprise liability for small businesses. It covers the use of vehicles that the business does not own, lease, or hire, but which are used in the course of business business. The most frequent scenario is an employee using their personal vehicle for work-related tasks.

• Delivery: An employee uses their car to deliver a pizza or a package.
• Errands: An office manager drives to the bank to make a deposit.
• Sales: A sales representative drives their personal sedan to a prospect's office.

Without Symbol 9 (Non-Owned) coverage, the business has no protection if the employee causes a multi-million dollar accident while performing these duties. You can test your knowledge on these specific scenarios by visiting our practice Commercial questions.

While HNOA is broad in its intent to protect the business, there are standard exclusions that often appear on the Property & Casualty exam:

• Property in the Insured's Care: Liability for damage to property being transported by the hired or non-owned vehicle is typically excluded under the liability portion.
• Physical Damage to the Vehicle: Standard HNOA provides Liability only (Bodily Injury and Property Damage to third parties). If the business wants coverage for the damage to the hired car itself (Comprehensive/Collision), a separate Hired Auto Physical Damage endorsement is required.
• Personal Use: Coverage only applies while the vehicle is being used for business purposes. If the employee stops for personal groceries on the way back from the bank, the "scope of employment" becomes a legal gray area that may trigger a denial.