1. Hired Auto Liability
Hired Auto Liability coverage will pay for damages to a third party, on behalf of your company if an employee causes
an accident or an injury to someone while driving a vehicle rented in their name for company related business. This basic
coverage protects the company only and is excess over the personal auto liability insurance carried by the driver of the rented
vehicle. State laws will still hold the actual driver personally liable for injuries or property damage to third parties caused by
an accident just as if he or she were driving their own personal vehicle. The driver would seek coverage for their liability
from their own personal auto insurance policy.
For example, if your employee rents a car to visit a client and causes an auto accident while driving that rented vehicle, the
person hit may look to your company to pay damages in excess over what is collectible from the employee’s personal auto
insurance. Without this coverage, your company would have no liability insurance coverage for this exposure.
Insurance carriers will often extend Hired Auto coverage on a primary rather than excess basis if the vehicle is rented and
paid for in the name of the employer rather than the employee. Best practices would be to confirm this in writing from the
insurance carrier in advance, provide employees with written rental car procedures, and establish contractual agreements with
rental car companies.
Coverage referred to as “Employee Hired Auto” (ISO endorsement CA 20 48) can sometimes be secured that will indemnify
the driver under the employer’s insurance policy thereby making the employer’s insurance primary over the employee’s
personal insurance even though the vehicle was rented in the employee’s name. Insurance carriers will often require motor
vehicle reports on all employees covered by this endorsement.
Hired Auto liability coverage does not cover physical damage to the actual vehicle that is rented. This is an additional
coverage that can be purchased directly from the car rental company or possibly endorsed to a commercial auto insurance
policy. Hired autos include all autos the insured leases, hires, rents or borrows, but not autos owned by employees, partners,
or family members. Hired Auto claims paid on the employer’s behalf are included in the employer’s claims experience and
can have an impact on the employer’s insurance premiums.
If you have additional questions contact Dan Bukaty at 913.345.0440 or email dbukaty@bukaty.com.
Bukaty Companies
11221 Roe Ave., Ste. 200
Leawood, KS 66211
Phone: 913.345.0440
Toll-Free: 888.657.0440
Fax: 913.345.2608
www.bukaty.com
September 24, 2008
Keeping Your Business Informed and Prepared
Risk Management Bulletin
March 7, 2012