May 09, 2024

What is Non-Owned Auto Liability Coverage, and When Do I Need It?

car on the road

    What is Non-Owned Auto Liability Coverage, and When Do I Need It? 

    Learn about non-owned auto liability coverage and when you need it. Understand how this important line of coverage can protect your business.


    If your business has employees who use their personal autos on the job, you’ll want to be sure that your policy has non-owned liability coverage. This coverage can be provided by Symbol 1 or Symbol 9 on a commercial auto policy or, if your business doesn’t own any autos, by an endorsement on your commercial package policy. 

    Non-owned auto liability coverage protects the business (not necessarily the employee) whenever any vehicles not owned by the business are used for business-related purposes.  

    For example, let’s say you instruct one of your employees to drop off this month’s invoices at the post office. If the employee is involved in a serious auto accident on the way to the post office, and your business is sued due to its vicarious liability as an employer, the policy will step in and provide defense. 

    Non-owned liability coverage also protects your business if you or any of the other owners use personally owned autos in connection with the business. Again, unless you are a sole proprietor and, therefore, the Named Insured listed in the policy, the policy does not automatically extend coverage to you individually. 

    If you need liability coverage for family members or volunteers driving vehicles in connection with the business, there are endorsements available to amend the coverage provided by the policy. Endorsements are also available to provide defense for individual employees who are sued due to their use of a personally owned auto in connection with the named insured’s business or personal affairs. 

    Non-owned auto liability coverage is generally excess of any other coverage available; in other words, the vehicle owner’s policy is going to be the first to respond. That is why it is essential that you confirm that anyone driving a personally owned vehicle in connection with the business carries adequate liability insurance. 

    As a best practice, the minimum personal auto liability limits we recommend are $100K per person/$300K per accident; however, you should consider higher limits depending on the frequency, distance, and types of vehicles being driven. Also, you should qualify drivers of non-owned vehicles the same as you would company-owned. 

    It’s important to remember that non-owned liability coverage only provides liability coverage; there is no coverage whatsoever for physical damage to the non-owned vehicle. Again, the vehicle owner’s policy is expected to address those damages. 

    If you’re not sure whether all your potential auto liability exposures are appropriately addressed or need help setting up a driver qualification program, please give our office a call; our team is happy to help!  

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