Usually not by itself. A standard commercial auto policy typically covers vehicles your business owns or leases, so an employees' personal car usually isn't covered just because they use it for work. To protect your business when employees drive their own vehicles on company errands, you generally need hired and non-owned auto (HNOA) coverage, which you can add to a commercial auto policy or, with some carriers, purchase separately. The employees' personal auto policy also plays a role, and in many cases, it responds first.
Many California businesses rely on employees to run to the bank, visit a job site, pick up supplies, or meet clients in their own cars. Here's how coverage works when employee personal-vehicle questions come up, and how to close the gaps.
Commercial auto insurance covers vehicles used in your business, such as company cars, trucks, and vans. It can help cover liability for injuries and property damage your drivers cause, plus physical damage to the vehicle if you add those coverages. Our commercial vehicle insurance page outlines the options available to local businesses.
The key detail is which vehicles are listed on the policy. Commercial auto policies define "covered autos" and many small-business policies cover only the specific vehicles the business owns.
In most situations, auto insurance follows the vehicle. If your employee causes an accident while driving their own car to a client meeting, their personal auto policy generally responds first.
If the damages exceed the employee's limits, or if their insurer disputes coverage, the injured party may come after your business because the employee was working at the time. California's minimum liability limits are $30,000 per person and $60,000 per accident for bodily injury, and $15,000 for property damage. Those limits can run out quickly after a serious accident.
Personal auto policies may limit or exclude certain business uses, such as making deliveries for pay. Employees who drive regularly for work should check with their own insurer.
Hired and non-owned auto coverage helps protect your business from liability when vehicles it doesn't own are used for business purposes.
| Coverage | What It Applies To | Example |
|---|---|---|
| Hired Auto | Vehicles your business rents, leases short-term, or borrows | A rental car for a business trip |
| Non-owned auto | Vehicles owned by employees and used for your business | An employee driving to the post office for you |
It's important to understand what HNOA typically does not cover. It generally protects your business against liability claims. It does not usually pay to repair the employees' car or cover the employees' own injuries.
| Loss | Where Coverage Often Comes From |
|---|---|
| Injuries to the other driver | Employee’s personal auto policy first, then your HNOA if limits are exceeded or the business is sued |
| Damage to the other vehicle | Employee’s personal auto policy, with HNOA possibly responding for claims against the business |
| Damage to the employee’s car | Employee’s own collision coverage |
| Injuries to your employee | Workers’ compensation, since the employee was working |
If your employee is hurt while driving for work, that's generally a workers' compensation matter, not an auto liability issue. According to the California Division of Workers' Compensation, "all California employers must provide workers" compensation benefits to their employees under California Labor Code Section 3700." Learn more on our workers" compensation page.
California employers have an additional obligation. Labor Code Section 2802 requires employers to reimburse employees for necessary expenses incurred in the course of their work. That often includes mileage when employees use their personal vehicles for business. Reimbursement and insurance are separate issues, but both should be part of your plan when employees drive.
Consider hired and non-owned auto coverage if:
Every business uses vehicles differently. An office that sends one employee to the bank each week has different needs than a contractor whose crew drives to job sites daily. Working with a local agent who understands California businesses can help you find the right mix of commercial auto, HNOA, and workers’ compensation coverage.
Commercial auto insurance generally covers vehicles your business owns, not your employees' personal cars. When employees drive their own vehicles for work, their personal policy usually responds first, but your business can still face liability. Hired and non-owned auto coverage helps fill that gap, and workers’ compensation helps protect employees who are hurt on the job.
Since 1969, John E. Peakes Insurance Agency has helped businesses throughout Ventura, Lancaster, and surrounding California communities find the right coverage. Our team can review how your employees use vehicles and help you build protection that fits your business.
Call us at 1-800-800-5199 to speak with our experienced team, or contact us online for a quote for commercial auto and non-owned auto coverage.
Read Also: What Does Commercial Auto Insurance Cover in an Accident?
Usually not, unless your policy includes hired and non-owned auto coverage. Standard commercial auto policies typically cover vehicles your business owns.
The employee’s personal auto policy generally responds first. If damages exceed their limits or the business is sued, hired and non-owned auto coverage can help protect your business.
Generally, no. HNOA typically protects your business from liability claims. The employee’s own collision coverage usually covers damage to their car.
It’s worth considering. If employees ever drive their own cars for business purposes, your business could still face liability after an accident.
