Why Non-owned Automobile Insurance is Important for Businesses?

Why Non-owned Automobile Insurance is Important for Businesses?

Every business knows the importance of commercial auto insurance. If you use business vehicles to deliver goods, buy raw materials from the supplier, or conduct any kind of business activity, you will be responsible for any damage that occurs to the vehicle, third party, or the employer driving it. But what if you don’t use your business car or any vehicle for business purposes?

Let’s say you have a driver who uses their personal vehicle to deliver something for your business and gets into an accident, causing severe damage to their vehicle, as well as, bodily damage to the employee. That’s where non-owned automobile insurance comes to your rescue. Keep reading to learn more about what insurance is and who needs it.

 

What is Non-Owned Automobile Insurance?

Simply put, non-owned automobile insurance is for people who rent cars frequently. If you don’t own a car, but rent them to conduct business-related delivery and other jobs, you must consider getting non-owned auto insurance. This insurance policy helps when you have an accident and cause damage to someone else’s vehicle or physical injuries to a third party. If you are not the owner of the car, but you were driving it at the time of the crash, you will be fully responsible for all medical expenses that the third party suffers.

The insurance mainly covers liabilities but is also useful for other state-related regulations, such as uninsured motorists. Note that the policy covers a single person whose name is listed on the policy. In other words, it can insure one person and only the damages caused by them will be covered by the insurance provider.

Also read: What are the Different Types of Business Insurance?

There are certain exceptions, though. Some policies might extend the coverage to the spouse, but most of them cover only the listed person. So, make sure you go through the terms and conditions carefully and check the coverage thoroughly.

 

Who Should Get Non-Owned Car Insurance?

If you are someone who rents a car frequently, whether for business purposes or personal reasons, you should get non-owned car insurance to protect yourself from a financial crisis due to an accident.

Additionally, the insurance is mandatory if your state requires you to have automobile insurance. If you were previously caught driving without a license or insurance, or you caused an accident, you might need to have non-owned car insurance to be able to drive rental cars.

 

How Does It Work?

Non-owned automobile insurance is complementary to any automobile insurance. As mentioned previously, it covers all kinds of physical injuries as well as vehicle-related damage that occurred to a third party by someone who rented or borrowed a car.

Also read: Do I need business insurance if I’m a sole proprietor?

Suppose you borrowed a friend’s car for a trip and ended up causing an accident leading to several bodily injuries to someone else. Your friend has auto insurance, which covers medical bills of up to $20,000.

However, the medical expenses that the other driver incurs for their injuries go up to $30,000. While the actual car owner’s insurance provider will cover damages up to $20,000, you will be responsible for paying the rest of their medical bill out of your pocket. That’s, however, not the case with people who invest in non-owned automobile insurance. Let’s say the non-owned auto insurance policy has a liability coverage limit of up to $40,000. You can easily claim the remaining $10,000 to pay your liability.

 

What Does the Coverage Include?

If you cause an accident in a borrowed car, here’s what you can expect the non-owned automobile insurance policy to cover.

  • Physical injuries that occur to others due to the accident.
  • Any kind of damage to someone else’s property, be it the vehicle or objects, like fences and furniture.
  • Coverage for court bills and other legal expenses in case you get sued

Not only that, but non-owned automobile insurance offers coverage for medical expenses that you might incur in a crash. The coverage differs depending on your state laws and your policy. In general, you can expect the following:

  • Uninsured Motorist Coverage: If you get into an accident caused by another driver or you experience a hit-and-run case with someone whose insurance policy doesn’t cover the medical bills or car repair bills you incur, you can use your non-owned automobile insurance to pay for these.
  • Medical Payments: As the name implies, you don’t have to worry about any medical expenses you and your passenger incur if you ever have an accident as long as you have non-owned automobile insurance. No matter who caused the accident, all your medical bills will be covered by the insurance provider. As mentioned above, non-owned automobile insurance always serves as the secondary policy that pays your bills that remain uncovered by your primary insurance, such as general liability or commercial automobile insurance.

 

What’s Not Covered?

While non-owned car insurance is great for those who drive rental cars regularly, they do not offer a comprehensive package. Unlike your primary auto insurance policy, non-owned insurance doesn’t cover problems like damage to the car due to a falling object, fire, theft, or damage to a natural disaster.

Likewise, any physical injury you sustain in an accident won’t be covered by your non-owned car insurance, unless you add medical payment coverage to the policy. It also doesn’t cover your spouse or any driver other than the person who’s insured.

If someone else uses a borrowed vehicle from your family and causes an accident, they won’t be covered. Lastly, the policy doesn’t cover your personal property. For instance, if your mobile or laptop gets stolen from the borrowed car while you are driving, the cost of these won’t be covered by your non-owned car insurance.

 

Bottom Line

That was all about non-owned automobile insurance. Businesses that have employed drivers who use rented or personal vehicles to conduct deliveries, supply items, and conduct other business-related operations, must get non-owned car insurance to protect the driver from any liability that could occur due to a mishap.