Even if your business does not own or operate vehicles, you could be pulled into hired auto claims by the negligence of others. The following is an example of real claim scenario that one of our contractor clients faced recently, and a reminder of why you should consider carrying hired and non-owned auto liability.
What is Hired Auto Liability?
Hired auto liability provides coverage for vehicles you hired, rent, or borrow in connection with your business activities. It is important to note that this is liability coverage only, meaning it pays for damages to a 3rd party, such as bodily injury or property damage.
Hired Auto Claims Scenario
A general contractor client of Safeguard Insurance was hired to build a large custom home in the Las Vegas area. Part of the construction required the removal of a large amount of fill dirt that had been dumped at the construction site. The general contractor hired an excavation company to load the soil and haul it away. The excavation contractor used two large dump trucks to haul the soil to a disposal site. While en route to the disposal site, one of the dump trucks blew a tire, lost control, and struck 3 other vehicles on the highway. The other vehicles were damaged extensively and several motorists reported injuries.
Within a few months of the accident, the general contractor received a letter from an attorney representing one of the injured motorists struck by the dump truck. The letter stated that it appeared the excavation company had insufficient commercial auto insurance limits for the amount of property damage and bodily injury being claimed. Fortunately, the general contractor had a commercial auto policy that included hired auto liability coverage. The claim was successfully defended by the general contractor’s policy and, ultimately, the insurance company for the excavation contractor was able to settle the claim with all injured parties within the policy limit.
Coverage Lesson Learned
Even if your businesses does not rent, hire, or borrow commercial vehicles, consider carrying hired (and non-owned) auto liability coverage. Hired auto liability is available as part of many small business policies and can often be added to a general liability policy. The cost is low and the coverage might just be invaluable if you are pulled into an obscure hired auto claims scenario.