Many small business owners start their business insurance portfolio by buying a BOP, short for a business owner’s policy. BOPs are packages of essential commercial insurance that are designed with the coverage and cost needs of small businesses in mind. However, they are not all-encompassing. Therefore, you will generally need to add quite a few endorsements into your BOP, and at other times you will have to buy separate, supplementary plans.
One of the liabilities that you will need to consider insuring is that of vehicle accidents when a driver operates under your authority. While in some cases you might need a full commercial auto insurance policy, in others, you might actually be able to add coverage directly into you BOP. This is called hired/non-owned auto liability insurance. Here’s how it works.
Understanding Liability Coverage in BOPs
Your BOP will likely include general liability insurance. This coverage is designed to protect the business when its mistakes or negligence cause harm to others. For example, if someone slips and falls while shopping in your store, then this coverage can help you repay them if they were to sue you for their medical bills. It’s essential for nearly all businesses in one way or other.
However, what many people don’t realize is that your general liability policy doesn’t extend to your company’s driving. Therefore, if someone drives on behalf of your company, then neither the business nor the driver might have the appropriate auto liability insurance. To get it, you will need to add hired/non-owned auto liability insurance into your BOP.
What is Hired/Non-Owned Auto Liability Insurance
Your business itself might not own any vehicles. However, you or your employees might routinely travel to meet clients, inspect work sites or perform other duties. In these situations, drivers operate under the business’s authority even if they drive their own cars. Therefore, the business itself might face the risk of a lawsuit from someone harmed by an accident your employee driver causes.
To protect these liabilities, you’ll need hired/non-owned auto liability insurance. The policy applies to driving liabilities the business faces even though it does not own a vehicle itself. It can cover both employees driving their own vehicles, and driving you do in vehicles that you hire for specific purposes.
Since this coverage is designed to compensate others harmed by your mistakes, its primary purpose is not to provide you with a settlement. However, it can protect your business nonetheless. Accident lawsuits, settlements and legal fees could get expensive, which is why the business needs this protection to help it fight the claim.
Remember, however, that hired/non-owned liability insurance is not adequate to cover a company-owned vehicle, either for liabilities or physical damage. Therefore, if your company owns a vehicle, you will likely have to buy commercial auto insurance separately from your BOP.