Any time an employee operates a vehicle on behalf of their employer, the company is liable for any accidents. For this reason, companies need to have some form of auto insurance. The type of insurance they should buy depends on whether they own, lease, rent, or borrow the vehicle. USMC Insurance briefly explains the difference between commercial auto and HNOA coverage to help companies know which insurance they need.

When a company owns the vehicle, it must purchase commercial auto insurance. This policy covers all company-owned trucks, vans, sedans, and any other types of cars. Commercial auto insurance offers coverage for liability, physical damage, medical expenses, and underinsured or uninsured drivers.

While commercial auto insurance covers company-owned vehicles, hired and non-owned auto insurance (HNOA) covers rented, leased, and borrowed vehicles. Hired vehicles are typically rented or leased vehicles, while employee cars used for business purposes are considered borrowed vehicles or non-owned autos. USMC Insurance HNOA policies cover physical damage to another person’s car, medical costs, and legal expenses if a business is sued for negligence. Because HNOA is a liability policy, it does not provide coverage for the policyholder.

Whether a business owns, rents, or borrows a vehicle, it should buy auto insurance. Commercial auto coverage can protect company-owned vehicles, while HNOA coverage can protect leased, borrowed, or rented cars. Even if a company doesn’t plan on renting a car regularly throughout the year, they should consider HNOA insurance to protect their business on the road.