Securing strong commercial auto insurance is essential for companies that use vehicles to complete tasks. Commercial auto insurance covers your business during several emergencies, such as liability disputes, theft attempts, and vehicle damage caused by inclement weather. However, hired auto coverage is something many business owners overlook when finalizing commercial auto coverage. Here's a closer look at commercial auto insurance for hired autos.
Hired autos describe vehicles you use to complete tasks on the job but do not own. Hired auto language is explained in the auto designation section of most commercial auto insurance policies. The Insurance Services Office classifies any vehicles your business rents or leases as hired autos. Your company must be listed in the declarations. Any vehicle borrowed by someone not included in the policy declarations is not classified as a hired auto. Hired auto exclusions include any vehicles you lease or rent from your employees or other business partners to complete tasks on the job.
Non-owned autos are vehicles you rent from your employees or business partners to complete business-related tasks. Some businesses use non-owned vehicles during emergencies. However, you'll be on the hook financially if damages occur.
Hired auto coverage primarily protects businesses if someone injures another person or causes property damage while driving on the job. Similar to traditional auto insurance, liability coverage handles potential legal fees and any medical bills or repair costs regarding the incident. The policy also covers your repair or replacement costs if the vehicle is vandalized while you're on the job. Insurers will look at your rental contracts to help determine your premiums. If hiring a vehicle is expensive, you'll pay higher premiums.
Another essential variable regarding commercial auto insurance for hired autos is the lease length. It's recommended that you pay attention to the period of the lease. The Insurance Services Office has guidelines for rating leased vehicles. According to the ISO, any vehicles your company rents for less than half a year are classified as hired autos. Any vehicles you rent for over a year are classified as vehicles you own. Be aware that many commercial auto policies do not abide by ISO's guidelines regarding the length of leases.
Many companies lease vehicles by signing long-term contracts. You should add these vehicles just like others in your declarations section. They may have the same coverage options as other vehicles that you own. When you lease a vehicle for an extended period, the owner may ask you to insure them as an extra insured on your commercial policy. You'll have to notify your insurer so they can add an endorsement to your policy.
You may own a small business. You can rent vehicles as a way to save money and maximize profits. Hired auto coverage is essential in this situation. If you have any questions regarding coverage, contact the team here at CF&P Insurance so we can assist you with the best available options.
