This includes vehicles you rent (hired) or, more commonly, personal cars driven by your employees while they are performing work tasks (non-owned). It steps in to cover the gap when an employee’s personal insurance isn't enough to satisfy a lawsuit aimed at your business.
The $100,000 Errand in Tyler
Amanda runs a busy interior design firm in Tyler. One afternoon, she asked her assistant, Sarah, to drop off some fabric samples at a client’s house across town. On the way, Sarah got distracted by her GPS and rear-ended a luxury SUV. Sarah’s personal insurance covered the first $25,000 of the damage, but the total bill for repairs and medical costs hit $125,000. Because Sarah was on a company errand, the SUV owner sued Amanda’s business for the remaining $100,000. Without HNOA coverage, Amanda would have been forced to pay that six-figure bill out of her firm’s operating budget.
The Employee Car Trap for Texas Businesses
Amanda’s story is an often overlooked risk for small businesses across Texas. Most owners assume that if an employee is driving their own car, it’s the employee’s problem if they crash. But in the eyes of the law, if that employee is on the clock and running to the post office or picking up lunch for a meeting, the business is legally responsible for their actions. In a state like Texas, where we spend half our lives on the road, this risk is one of the most common ways small businesses get hit with unexpected financial hits.
What Exactly Does HNOA Cover?
Hired and Non-Owned Auto insurance provides a specific liability shield for two scenarios:
- Non-Owned Coverage: This protects your business when employees use their own vehicles for company business. It covers the bodily injury and property damage claims that exceed the employee's personal policy limits.
- Hired Coverage: This applies to vehicles your business leases, hires, or rents, like a truck from a rental agency for a weekend event.
- Legal Defense: Similar to your general liability or other liability policies, this pays for your attorney fees and court costs if your business is sued following an accident.
Why Your General Business Insurance Isn't Enough
Many Texas business owners think their general liability policy covers these accidents. The hard truth is that almost every general liability policy in Texas explicitly excludes auto-related incidents. If you don't have this specific endorsement or policy, you have a gaping hole in your safety net every time an employee takes off in their car for a work-related task. It is a vital addition for consultants, caterers, real estate offices, and any service-based firm.
An Affordable Shield for the Texas Road
The best part about hired and non-owned auto coverage is that it is incredibly affordable. For most small businesses, it can be added as a simple endorsement to your business owner’s policy (BOP) for a fraction of what a single fender-bender would cost. It’s a small price to pay to ensure that a distracted employee doesn't drive your business into bankruptcy.
Is your business riding shotgun on your employees' commutes? Most owners don't realize they're exposed until they get a call from a personal injury lawyer. Our personalized risk assessment looks at your daily operations to ensure your business is protected every time someone hits the road for you.