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Hired and Non-Owned Auto Insurance
If your food service business doesn't deliver but occasionally relies on employees to drive either rental cars or personal vehicles on behalf of your business, you may be eligible for hired and non-owned auto insurance. Usually added as limited endorsements on a general liability or Business Owner's Policy, this type of insurance supplements both car rental agencies' liability coverage and your employees' personal auto insurance policies. Coverage may also be available for catering businesses in which delivery is an expected part of operation.
What You Need to Know
This type of insurance pays for the high cost of legal fees, court-ordered judgments or settlements, and other expenses if your restaurant or catering business should be sued over bodily injury or property damage caused by an employee driving a personal or rented vehicle on behalf of your business.
For example, if you send an employee on an errand to pick up some supplies and that employee causes an accident in his or her personal vehicle on the way, this insurance protects your business if someone suffers an injury or property damage in that accident and decides to sue your restaurant. While your employee will still be personally liable for injuries or property damage to third parties – his or her own auto liability coverage should kick in – your hired and non-owned auto coverage will be there to cover your business and make up for the difference if the employee's policy isn't enough to cover a claim.
While you may think that this scenario is unlikely, the fact is that these types of claims can be financially devastating to a small food service business, while the cost of this insurance is generally very affordable – less than a few hundred dollars a year.
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Hired and Non-Owned Auto Insurance Tips
- Be sure all employees who drive personal vehicles on company business are properly licensed and carry their own liability insurance.
- Check to ensure all personal vehicles used on company business are in good working order and have passed all required safety inspections.
- Hired auto liability coverage can either supplement or replace a car rental agency's liability coverage. But because hired auto insurance doesn't cover physical damage to a rented vehicle, be sure to purchase the rental agency's physical damage coverage.