Hired and Non-Owned Auto

What You Need to Know

Two coverage components:

• Hired auto coverage – protects your business when renting or leasing vehicles, such as renting a van to pick up supplies or transport catering equipment
• Non-owned auto coverage – protects your business when employees use their personal vehicles for business activities, such as running to the bank, picking up emergency supplies, or making deliveries

This coverage is typically added as an endorsement to your general liability policy and provides liability protection if an employee causes an accident while using a hired or non-owned vehicle for your business. It does not cover physical damage to the vehicle itself – only your liability for injuries or property damage the employee causes to others. The employee's personal auto insurance typically provides primary coverage, but if damages exceed those limits, your coverage provides excess liability protection.

Why It Matters for Restaurant Owners

Many restaurant owners don't realize they can be held liable when employees use their personal vehicles for business errands, even if the restaurant doesn't own any vehicles. If your manager gets in an accident while driving to the bank to deposit cash receipts, or an employee picks up emergency supplies in their personal car and causes an accident, your restaurant can be sued for damages.

The employee's personal auto insurance will typically provide primary coverage, but personal policies often have low limits like $25,000 or $50,000 that are easily exhausted in a serious accident – and the injured party can come after your business for the remaining amount. Without this coverage, you'd be personally responsible for those excess damages, which could reach hundreds of thousands of dollars.

This coverage is relatively inexpensive (often just a few hundred dollars per year) compared to the protection it provides, and it's essential any time an employee ever drives for business reasons, even occasionally. Note that if you're offering food delivery with employees using their own vehicles regularly, you need more comprehensive commercial auto coverage specifically for delivery operations, not just hired and non-owned coverage.