The trucks on your schedule aren't the only vehicles your business drives. Rentals, borrowed trucks and employees' own cars can all put the company on the hook when they're used for work.
Quick answer
Hired and non-owned auto typically covers your business's liability when people drive vehicles you rent, borrow or don't own for work, such as a rented box truck or a project manager's own car on a site visit. It generally doesn't pay for damage to the rental or replace the employee's personal insurance. Many contractors need it even with a full owned fleet.
Picture an ordinary week. A superintendent drives his own pickup to a site walk. The office manager takes permit drawings to the city in her car. A company truck goes into the shop, and the crew rents one for three days. A foreman borrows a relative's flatbed to move scaffolding. None of those vehicles is on the policy, and in every case the person behind the wheel is working for you.
If one of those trips ends with someone hurt, the injured party's attorney is likely to look for every policy within reach, and the employer is an obvious one. For a personally owned car, the employee's own policy usually responds first, since California's Insurance Code generally treats the policy that describes or rates a vehicle as an owned auto as primary and other policies as excess. Its limits may be modest, though, and the claim against the business can run past them. Hired and non-owned auto coverage is how a business auto policy typically answers that claim.
It's a small piece of a full commercial auto insurance in California program and one of the pieces most often missing until something goes wrong.
Official sources
The two halves are sold together so often that people treat them as one coverage. They aren't. The Department of Insurance's commercial guide describes a business auto policy as flexible enough to cover hired and non-owned autos alongside the ones a company owns, which is why each piece has to be chosen rather than assumed.
Some fleets carry symbol 1, any auto, which generally covers owned, hired and non-owned liability in one stroke. Our comparison of scheduled autos vs any auto coverage explains when that's worth it. Whatever the structure, read the actual policy. The letters HNOA on a certificate don't tell you what the forms say.
Official sources
Hired and non-owned is generally liability coverage. That leaves gaps owners are often surprised to find:
If you rent trucks regularly, ask for hired auto physical damage sized to what you actually rent. A rented ten-foot box truck and a rented dump are very different values.
Non-owned coverage works better with a short written policy behind it:
Watch for the employee whose personal truck has quietly become a company truck. If a foreman drives their own pickup to job sites every day with your tools in the bed, it may belong on your schedule instead. Our comparison of when to list an employee's vehicle walks through that choice. Approving drivers and checking their records is also part of the controls described in fleet safety and claims defense, and our guide to hiring drivers and checking MVRs for a fleet covers the record review itself.
A few situations sit on the line between hired autos and owned ones, and contractors tend to run into each of them.
When in doubt, describe the arrangement to your broker before the vehicle is on the road. Fixing the structure afterward, once a claim is open, is usually far harder.
General contractors, owners and public agencies commonly ask subcontractors for auto liability covering owned, hired and non-owned vehicles, usually at a $1 million combined single limit. A contractor with two trucks and no hired and non-owned coverage can fail that requirement even though its own vehicles are insured.
An umbrella or excess policy over the auto should recognize the same exposure. If the umbrella's underlying schedule reaches only owned autos, a serious crash in an employee's car may never get to it. Umbrella and excess coverage is placed separately, and it should line up with the auto policy before any certificate goes out.
Renewal is a good time to confirm all of this, and our renewal checklist includes a step for listing employees who drive their own cars. The coverage itself is explained on our hired and non-owned auto insurance page. When you're ready, get a quote that includes hired and non-owned.
Short rentals usually fall under hired auto coverage. When a California contractor keeps renting the same truck month after month for one project, many underwriters want it added to the schedule like an owned unit.
Crews often decline the rental company's damage waiver because the company card supposedly covers it. Card benefits often exclude trucks, cargo vans and business use, which can leave the business paying for damage to the rental.
Since the employee's own policy usually answers first, its limits matter to the business. Ask approved drivers for a current declarations page every year and keep it with their MVR in the driver file.
A general contractor asking for owned, hired and non-owned auto liability at a $1 million combined single limit can reject a certificate that shows only scheduled trucks, even when the owned vehicles are well insured.
Official resources
Requirements change without notice. Confirm what applies to your fleet with the agency before relying on it.
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Have ready: vehicle list with VINs, driver list, current declarations page, loss runs.
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