What is Hired and Non-Owned Auto?
Hired and Non-Owned Auto Insurance is liability coverage that protects your restaurant when employees use vehicles for business purposes that are not owned by your company. “Hired auto” refers to vehicles your business rents or leases (such as renting a van to pick up supplies or transport catering equipment), while “non-owned auto” refers to employees’ personal vehicles used for business activities (such as a manager running to the bank to make a deposit, an employee picking up emergency supplies, or a server delivering food in their own car). 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.
What you need to know
Hired and Non-Owned Auto Insurance fills a critical coverage gap when employees use vehicles for business purposes that your company doesn’t own.
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)
What this coverage provides:
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 covers your legal responsibility for injuries or property damage the employee causes to others.
What this coverage does NOT provide:
This coverage 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 or the rental company’s insurance covers vehicle damage.
How coverage works:
The employee’s personal auto insurance typically provides primary coverage, but if damages exceed the employee’s policy limits, your Hired and Non-Owned Auto coverage provides excess liability protection for your business.
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.
Common scenarios creating liability:
If your manager gets in an accident while driving to the bank to deposit your restaurant’s cash receipts, or if an employee picks up emergency supplies in their personal car and causes an accident, your restaurant can be sued for damages.
The coverage gap problem:
The employee’s personal auto insurance will typically provide primary coverage, but if the damages exceed the employee’s policy limits, the injured party can come after your business for the remaining amount—and personal auto policies often have low limits like $25,000 or $50,000 that are easily exhausted in a serious accident.
The financial exposure without coverage:
Without Hired and Non-Owned Auto coverage, you would be personally responsible for these excess damages, which could be hundreds of thousands of dollars in a serious injury accident. Medical bills, lost wages, and pain and suffering awards quickly exceed typical personal auto policy limits.
Why this coverage is cost-effective:
This coverage is relatively inexpensive (often just a few hundred dollars per year) compared to the significant protection it provides. The modest premium cost is minimal compared to the catastrophic liability exposure you face without it.
When you need this coverage:
If you regularly rent vehicles or if your employees ever use personal vehicles for any business purpose—even occasionally—this coverage is essential. Any time an employee drives for business reasons, your restaurant has potential liability exposure.
Important distinction for delivery operations:
Note that if you’re offering food delivery service with employees using their own vehicles, you need more comprehensive commercial auto coverage specifically for delivery operations, not just hired and non-owned coverage. Hired and non-owned coverage is for occasional business use, not regular delivery operations.