Commercial auto liability for staffing companies

Hired & Non-Owned Auto Insurance for Staffing Agencies

Temporary staffing agencies face automobile liability exposures even when they don't own a single company vehicle. Hired and Non-Owned Auto Insurance provides liability protection for certain accidents involving vehicles your business rents, leases, hires, or does not own.

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What Is Hired & Non-Owned Auto Insurance?

Hired and Non-Owned Auto Insurance is a type of commercial automobile liability coverage designed to protect businesses against certain claims arising from the business use of vehicles they do not own. It consists of two primary coverages — Hired Auto Liability and Non-Owned Auto Liability — each addressing a distinct set of vehicle exposures.

Coverage 1

Hired Auto Liability

Hired Auto Liability provides protection when a staffing agency faces covered liability claims involving vehicles it rents, leases, hires, or borrows for business use.

Examples may include:

A recruiter renting a vehicle to visit client locations
A staffing agency renting a passenger van for company business
A manager using a rental car while traveling for work
A temporary vehicle rented by the agency while a company vehicle is unavailable

Important consideration: Hired Auto Liability generally does not automatically cover vehicles rented or borrowed from employees or members of their households. Coverage depends on the policy's definitions, terms, and covered auto designations.

Coverage 2

Non-Owned Auto Liability

Non-Owned Auto Liability helps protect a staffing agency against covered liability claims arising from the business use of vehicles it does not own. This is particularly relevant when employees use their personal vehicles for company business.

Examples may include:

Recruiters driving personal vehicles to visit clients
Employees making business-related deliveries or errands
Office staff traveling between agency locations
Employees using personal vehicles to transport documents or supplies
Other authorized business use of employee-owned vehicles

Important consideration: An employee's personal auto insurance generally provides the initial liability coverage when applicable. Non-Owned Auto Liability is typically designed to protect the business against its covered liability, often on an excess basis.

Why Staffing Agencies Should Consider This Coverage

Staffing companies have automobile exposures that may differ from traditional businesses. Even if a staffing agency doesn't own vehicles, it may still face liability following an accident involving an employee conducting company business.

For example, suppose a recruiter uses a personal vehicle to visit a prospective client and causes an accident resulting in injuries and property damage. The injured party could potentially pursue a claim against both the employee and the staffing agency. Without appropriate Non-Owned Auto Liability coverage, the staffing agency could face significant uninsured expenses.

What Does Hired & Non-Owned Auto Insurance Cover?

Coverage varies by insurance carrier and policy, but Hired and Non-Owned Auto Liability may provide protection for:

Third-Party Bodily Injury: Covered claims involving injuries to others resulting from an automobile accident.
Third-Party Property Damage: Covered liability for damage to another person's vehicle or property.
Legal Defense Costs: Defense expenses associated with covered automobile liability claims, subject to policy provisions.
Business Liability: Financial protection when the staffing agency is legally responsible for a covered accident involving a hired or non-owned vehicle.

What Is Not Typically Covered?

Hired and Non-Owned Auto Liability is not the same as a full commercial auto insurance policy. Common limitations include:

Damage to Employee Vehicles: Non-Owned Auto Liability does not generally pay to repair an employee's personal vehicle following an accident.
Damage to Rental Vehicles: Physical damage to a rented vehicle generally requires separate hired auto physical damage coverage or other applicable protection.
Employee Injuries: Work-related injuries to employees are generally addressed through workers' compensation, subject to applicable law and policy terms.
Personal Driving: Accidents occurring during purely personal use of a vehicle generally fall outside the scope of business auto liability coverage.
Company-Owned Vehicles: Vehicles owned by the staffing agency generally require commercial auto coverage with the appropriate covered auto designation.

Special Considerations for Temporary Staffing Agencies

Temporary Employees Driving Client-Owned Vehicles

One of the more complicated automobile exposures for staffing agencies occurs when temporary employees operate vehicles owned by their clients — delivering products, moving vehicles at dealerships, operating trucks at distribution centers, or providing transportation services.

Important: Standard Hired and Non-Owned Auto coverage should not be assumed to protect every exposure involving a temporary employee operating a client's vehicle. The assignment, vehicle ownership, applicable policy forms, and contractual responsibilities must be reviewed to determine what coverage is available and appropriate.

Transporting Temporary Employees

Some staffing agencies arrange transportation for employees traveling to and from job assignments. This may include company-owned vans, rented passenger vehicles, or transportation provided by other employees. Passenger transportation can create additional liability exposures, especially when transporting multiple workers.

Important: Staffing agencies providing employee transportation should review their operations with an insurance professional to determine whether their automobile policies properly address these activities.

Client Contracts and Insurance Requirements

Many staffing agreements contain provisions establishing responsibility for automobile liability when temporary employees operate vehicles. These provisions may include minimum automobile liability insurance limits, additional insured requirements, indemnification and hold-harmless agreements, driver qualification and licensing requirements, and restrictions on employee operation of client vehicles.

Important: Understanding these contractual obligations is important because a staffing agency may agree to assume liabilities that are not automatically covered by its insurance policies.

Hired & Non-Owned Auto vs. Commercial Auto Insurance

Although these coverages are related, they serve different purposes.

Coverage	Primary Purpose
Hired Auto Liability	Liability arising from covered vehicles rented, hired, leased, or borrowed for business use
Non-Owned Auto Liability	Liability arising from business use of vehicles not owned by the agency
Commercial Auto – Owned Vehicles	Liability coverage for eligible company-owned vehicles
Auto Physical Damage	Protection against covered damage to insured vehicles, when purchased

How Can Staffing Agencies Reduce Automobile Liability Risks?

Insurance is only one part of managing automobile-related risks. Staffing agencies should consider implementing procedures for employees authorized to drive as part of their assignments.

Verify that employees performing driving duties hold appropriate driver's licenses
Review motor vehicle records when driving is part of an employee's job
Establish written policies governing business-related vehicle use
Confirm that employees using personal vehicles for business maintain appropriate personal automobile insurance
Clearly define vehicle operation responsibilities in client staffing agreements

Questions About Your Auto Liability Exposure?

Russ Rymer specializes in insurance for temporary staffing companies and can help you evaluate your automobile liability exposures and coverage options.

Get a Quote

Talk to Russ Rymer

Staffing insurance specialist with decades of experience placing coverage for temp staffing companies nationwide.

865-963-1224 Russ.Rymer@miginsgroup.com