Your employee takes their own car to the bank for a deposit. On the way back, they cause a crash and the other driver is hurt. A claim lands on your desk, and the first question is whose insurance responds. For many California businesses, the honest answer is less clear than it should be.

What is hired and non owned auto insurance?

Hired and non owned auto, often shortened to HNOA, is liability coverage for vehicles your business uses but does not own. “Hired” means vehicles your business rents, leases, or borrows. “Non owned” means vehicles owned by someone else, most often employees’ personal cars used for work errands, client visits, or deliveries.

Why doesn’t your existing insurance cover this?

Two gaps overlap. Personal auto policies commonly exclude or limit business use. A commercial auto policy is typically built around vehicles your business owns or lists on the policy.

An accident in an employee’s personal car on a work errand can fall between the two, and your business can still be named in the claim.

What does it cover?

HNOA is liability coverage. It is designed to respond to:

Bodily injury to other people caused in an accident
Property damage to other people’s property
Legal defense costs for covered claims

All of this is subject to the policy’s terms and limits.

What does it not cover?

Damage to the vehicle itself. Physical damage to an employee’s car or a rental is generally separate coverage.
The employee’s own injuries. Those are a workers compensation matter.
Personal driving. Commuting and personal errands generally fall outside business use.
Vehicles your business owns. Those need commercial auto insurance.

Who should consider it?

Any business where employees or owners sometimes drive personal vehicles for work. In the Bay Area, where small teams run client visits and errands in their own cars, that covers a lot of businesses:

Offices that run bank, mail, or supply errands
Sales teams and consultants visiting clients
Property managers, real estate offices, and service companies
Trades and crews who use their own cars to reach job sites
Businesses that rent vehicles or vans for projects and events

Even occasional use counts. One trip is enough for a claim.

How is this different from reimbursing employee mileage?

They solve different problems. California Labor Code section 2802 generally requires employers to reimburse necessary business expenses, which can include an employee’s use of a personal vehicle for work. That reimbursement covers the employee’s cost of driving.

It does not protect your business if a crash leads to a liability claim. HNOA is the coverage aimed at that risk. This is general information, not legal advice, so confirm your reimbursement practices with HR or an employment attorney.

How can you check your exposure?

Do any employees, owners, or volunteers drive personal vehicles for business?
Do we rent vehicles for projects or events?
Does our commercial auto or package policy include hired and non owned coverage, and at what limits?
Do employees who drive for work carry their own auto insurance?
Do we have a written policy on business driving?

Frequently asked questions

Does my employee’s personal auto insurance cover a work errand?
Often not. Many personal auto policies exclude or limit business use, so do not assume it applies. Even when it does respond, your business can still be named in the claim.

Is hired and non owned auto the same as commercial auto?
No. Commercial auto is built around vehicles your business owns. HNOA adds liability protection for vehicles you rent or that employees own. Depending on the carrier, it is added to a business policy such as commercial auto or a package policy, or bought on its own.

Does it cover damage to my employee’s car?
Generally not. It is liability coverage, so damage to the vehicle being driven usually needs separate physical damage coverage. Ask your agent what can be added.

Does it cover employees who commute?
No. Commuting and personal errands generally fall under the employee’s own personal auto policy.

If you are an individual who borrows or rents cars, see our guide for rideshare drivers and vehicle borrowers.

At April Insurance Agency, we help San Francisco and Bay Area employers find out whether their business is covered when employees drive for work. Reach out to April Insurance Agency to review your options.
Call 415-242-8100 to get started.