Emerging Business Insights
Understand Your Business’s Auto Liability Exposure
AUGUST 4, 2026
Most businesses have auto liability exposure — even if they don’t own vehicles. When vehicles not owned by the company are used for business purposes, many commercial insurance programs contain hidden gaps that can leave claims uncovered.
How your company and employees use vehicles — whether company-owned, employee-owned, or third-party owned — can create significant risk. Identifying these exposures allows you to address them with the right insurance solutions, helping protect both your business and employees if they are held liable for an accident.
The Importance of Hired and Non-Owned Auto Coverage
Auto liability exposure varies based on how vehicles are used in your operations. Use may be limited (e.g., occasional errands in a personal vehicle) or frequent (e.g., employees regularly driving for sales or service calls).
Many companies are unaware of the significant uncovered loss potential when employees use hired or non-owned vehicles for business purposes.
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Hired autos are vehicles the business obtains through renting, leasing, or borrowing on a short-term basis. |
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Non-owned autos are vehicles not owned by the business but used for company purposes, such as personal autos owned by employees or volunteers. |
Hired auto coverage includes liability protection (bodily injury and property damage to third parties), and may also be structured to include physical damage coverage (comprehensive and collision) for the hired vehicle.
Non-owned auto coverage provides liability protection only.
At his supervisor’s request, Nick drives a company‑rented box truck to a supplier to pick up parts. While en route, he strikes a tow truck operator who is assisting a driver with a disabled vehicle on the roadside.
The injured operator sues Nick and Nick’s employer, and both are found liable. Because the employer carries hired auto liability coverage, the insurer settles the claim for $690,000.
Without this coverage, both Nick and his employer would have been responsible for the full cost of the claim.
Tabitha uses her personal vehicle to make daily business deposits at a nearby bank. While returning to the office, she runs a red light and causes a serious accident.
The injured driver sues both Tabitha and her employer. Tabitha’s personal auto policy pays its $100,000 limit, but the total damages exceed $400,000. Because she was driving for business purposes, her employer is held liable for the remaining amount.
Without non-owned auto liability coverage, the employer would be responsible for these costs out of pocket.
The Benefits of “Drive Other Car” Coverage
In some cases, employees who drive company vehicles do not maintain personal auto coverage because they do not own a vehicle. However, they might still drive other vehicles for personal use.
Business auto policies generally follow the vehicle — not the driver — creating a potential uninsured exposure that many companies overlook.
When these employees drive a non-company vehicle (e.g., borrowing a car or renting one for personal use), coverage is typically not provided unless a drive other car endorsement is added. This endorsement can extend coverage for specified individuals for liability, physical damage, medical payments, and uninsured motorists.
Here’s a claim scenario that illustrates the protection provided via drive other car coverage.
John owns a construction company and drives company vehicles insured on the business’s auto policy. He doesn’t carry a personal auto policy because he doesn’t own personal vehicles, and he believes the coverage provided by the business auto policy will cover him while driving a non-company-owned vehicle.
John is staying with friends on vacation, and borrows a friend’s car to drive to the beach. While driving, he rear-ends a car at an intersection, injuring its passengers and damaging both vehicles. He is sued by the occupants of the other car.
The business auto policy carried by John’s company doesn’t include a drive other car endorsement, so coverage is denied when he files the claim, leaving him to pay more than $430,000 in damages out of pocket. If John’s business auto policy had included a drive other car endorsement naming John as an insured, coverage would have been provided for this claim.
How USI Can Help
USI Insurance Services works with businesses to:
- Evaluate all job functions that require driving
- Determine the company’s exposure regarding personal auto use and the company’s policy for employees to obtain adequate personal auto coverage
- Analyze potential exposure to personal auto use with hired or borrowed vehicles
In addition to the exposures discussed in this article, USI’s analysis of automobile liability can identify other opportunities to reduce uninsured exposures or create premium savings. To learn more about the risk management services available through USI, email select.business@usi.com.
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