Hired and Non-Owned Auto Insurance: What Your Business Actually Needs

Hired and non-owned auto insurance protects your business when you use vehicles you don't own

If your business uses vehicles that belong to someone else—whether you rent them, borrow them, or your employees drive their personal cars for work—you need hired and non-owned auto insurance. This coverage fills a gap that your business liability policy leaves open. Your general liability policy won't cover accidents that happen in or with a vehicle, and the vehicle's owner's personal insurance usually won't cover business use. Hired and non-owned auto insurance sits between those two and protects your company from the costs of damage, injuries, or property damage that result from using vehicles you don't own.

This is not the same as commercial auto insurance, which covers vehicles your business owns. Hired and non-owned is an endorsement you add to your commercial auto policy to cover vehicles you don't own but use for business purposes. Without it, an accident in a rented truck or an employee's personal car could leave your business liable for the full cost.

Key Takeaways

• Hired auto coverage protects you when you rent or lease vehicles; non-owned coverage protects you when employees use their personal cars for work.
• This insurance covers liability (injuries and property damage you cause), collision, and comprehensive damage, depending on what you purchase.
• Most policies exclude hired vehicles used in your core business (like rental trucks for a moving company), so you need to know what your policy actually covers.
• South Carolina requires minimum liability coverage of 15/30/25 (bodily injury per person, per accident, and property damage), and your hired and non-owned policy must meet or exceed that.
• The cost depends on how many employees drive, what they drive, and how often—get quotes from multiple insurers because rates vary widely.

The difference between hired and non-owned coverage

Hired auto coverage applies when your business rents, leases, or borrows a vehicle for a specific purpose. You control the vehicle during that time, and you're responsible for what happens while you're using it. This might be a moving truck for a one-day job, a van for a delivery run, or a car you lease for a sales representative. The rental company's insurance is primary (it pays first), but if the damage exceeds their coverage limits or if there's a dispute about fault, your hired auto coverage steps in.

Non-owned auto coverage applies when your employees use their own personal vehicles for business purposes. Your employee's personal auto insurance is primary, but it often excludes or limits coverage for business use. Non-owned coverage protects your company if an employee causes an accident while running a business errand—picking up supplies, visiting a client, making a delivery. You don't own the car, you don't control it day-to-day, but your business is liable if something goes wrong.

What hired and non-owned insurance actually covers

Hired and non-owned auto policies typically include three types of coverage. Liability pays for injuries to other people and damage to their property if you or your employee causes an accident. In South Carolina, you must carry at least 15/30/25 liability coverage—$15,000 per person, $30,000 per accident for bodily injury, and $25,000 for property damage. Many businesses carry higher limits, especially if they transport clients or carry valuable cargo.

Collision coverage pays to repair or replace the hired or non-owned vehicle if it's damaged in an accident, regardless of who's at fault. Comprehensive coverage pays for damage from theft, weather, vandalism, or other events not involving a collision. Both collision and comprehensive usually come with a deductible—commonly $500 or $1,000—meaning you pay that amount out of pocket before insurance kicks in.

Some policies also include uninsured or underinsured motorist coverage, which protects you if you're hit by a driver who has no insurance or insufficient insurance. This is optional in South Carolina but worth considering if your employees drive frequently. This coverage can prevent a single accident from becoming a financial crisis if the other driver cannot pay.

What hired and non-owned insurance does not cover

Read the exclusions carefully. Most hired and non-owned policies exclude vehicles used in your primary business operation. If you run a moving company, hired auto coverage won't cover the moving trucks you rent—you need commercial auto insurance for those. If you run a delivery service, non-owned coverage won't cover personal vehicles your drivers use to make deliveries as their main job. The policy is designed for occasional or secondary use, not your core business activity.

Policies also typically exclude hired vehicles if you have a lease or rental agreement for more than 30 days. Long-term rentals need to be added to your commercial auto policy instead. Damage to the hired vehicle caused by wear and tear, poor maintenance, or normal use is usually not covered—only sudden, accidental damage. Some insurers also exclude hired vehicles if you're using them for rideshare, delivery services like food delivery, or other commercial transportation.

Non-owned coverage excludes vehicles owned by your spouse or household members, vehicles you've borrowed from family, and vehicles you own but haven't added to your commercial policy. It also excludes vehicles used by employees who are not on your payroll or who are using the vehicle for personal errands unrelated to your business. If an employee uses a personal vehicle for a side job or personal trip, that's not covered.

How to determine what coverage limits you need

South Carolina's minimum is 15/30/25, but that's a floor, not a recommendation. If your business transports clients, carries expensive equipment, or operates in high-traffic areas, higher limits protect you from a lawsuit that exceeds the minimum. Many small businesses carry 100/300/100 or 250/500/250 limits. The difference in premium between minimum and higher limits is usually modest—often $20 to $50 per month—but the difference in protection is substantial.

Consider your employees' driving records and the frequency of business use. A business where one employee occasionally drives to client meetings has different risk than a business where five employees drive daily. Ask your insurance agent what limits other businesses in your industry typically carry. They can also tell you whether your business would benefit from uninsured motorist coverage or hired auto coverage for specific vehicles you rent regularly. If you're unsure, err on the side of higher limits—the cost difference is small compared to the risk.

How to purchase hired and non-owned auto insurance

Hired and non-owned auto coverage is usually added to your commercial auto policy as an endorsement, not purchased separately. If you already have a commercial auto policy, contact your agent and ask to add hired and non-owned coverage. If you don't have a commercial policy yet, you'll purchase hired and non-owned as part of the base policy. The endorsement typically costs between $30 and $200 per month, depending on your business size and risk profile.

When you get quotes, tell the insurer how many employees drive, what they drive (if you know), and how often they drive for business. Be honest about the frequency—if you say "occasionally" but your employees drive daily, the policy may not cover a claim. Some insurers ask for a list of drivers; others use a blanket endorsement that covers any employee. Blanket coverage is simpler but may cost more. Ask whether the quote includes collision and comprehensive or just liability.

Shop with at least three insurers. Rates for hired and non-owned coverage vary significantly based on how the insurer assesses risk. One company might charge $40 per month; another might charge $80 for the same coverage. Get quotes from your current commercial insurance agent, from a broker who works with multiple insurers, and directly from at least one large insurer. Compare the limits, deductibles, and exclusions side by side before deciding.

What happens when you file a claim

If an employee causes an accident in a personal vehicle, report it to your insurance company as soon as possible. Provide the employee's name, the date and time of the accident, the location, a description of what happened, and the names and contact information of any other parties involved. Take photos of the damage if you can, and get a copy of the police report if one was filed. The faster you report, the faster the investigation can begin.

Your insurer will investigate and determine whether the accident falls under your hired and non-owned coverage. If it does, they'll work with the other party's insurance or directly with the other party to settle the claim. If the damage exceeds your coverage limits, you may be responsible for the difference. This is another reason to carry adequate limits—a serious accident can easily exceed $30,000 in damages. Keep documentation of all communications with your insurer and the other parties involved.

Frequently Asked Questions

Do I need hired and non-owned insurance if my employees have their own auto insurance?

Yes. Your employee's personal auto insurance is primary, but it often excludes or limits coverage for business use. If the employee's insurer denies the claim because of business use, your hired and non-owned coverage protects your company. Without it, you could be liable for the full cost of the accident.

Does hired and non-owned insurance cover rental trucks?

It depends on your business. If you rent trucks as part of your core business (like a moving company), hired auto coverage won't cover them—you need commercial auto insurance. If you occasionally rent a truck for a one-time job, hired coverage usually applies. Ask your insurer whether your specific use is covered before you rent.

What if an employee gets in an accident with a borrowed vehicle?

Non-owned coverage typically excludes vehicles borrowed from family members or household members. If an employee borrows a friend's car for a business errand, the friend's insurance is primary, and your non-owned coverage may apply as secondary. If the friend's insurance denies the claim, contact your insurer to see whether they'll cover it. This is a gray area, so clarify it with your agent before it happens.

How much does hired and non-owned auto insurance cost?

Costs vary based on the number of drivers, their driving records, how often they drive, and the coverage limits you choose. A small business with one or two occasional drivers might pay $30 to $60 per month; a business with five daily drivers might pay $100 to $200 per month. Get quotes from multiple insurers to compare.

Can I add hired and non-owned coverage to my business liability policy instead of my commercial auto policy?

No. Hired and non-owned auto coverage must be part of a commercial auto policy because it covers vehicle-related liability and physical damage. Your business liability policy covers premises liability and other non-vehicle risks. They work together but are separate policies.