Your business does not need to own a single vehicle to face liability from a car accident.
Imagine an employee driving their personal vehicle to meet a customer. On the way, they cause an accident that injures another driver. The injured person decides to sue both the employee and your company.
The employee has personal auto insurance, but what happens if the claim exceeds their policy limits or your business is held legally responsible?
This is where hired and non-owned commercial auto insurance becomes important.
Hired and non-owned auto insurance protects businesses against certain liability claims arising from vehicles they use for business but do not own. It generally applies to rented vehicles and employees' personal vehicles used for work. Coverage can help pay legal defence costs and covered damages when the business is legally liable for an accident.
This insurance is especially relevant for Canadian companies whose employees regularly visit customers, make deliveries, travel between job sites, or rent vehicles for business purposes.
Even businesses with existing commercial auto and fleet insurance should review whether their policies address vehicles that are not owned by the company.
What Is Hired and Non-Owned Commercial Auto Insurance?
Hired and non-owned automobile insurance is liability coverage for businesses that use vehicles owned by other people or organizations.
The coverage generally addresses two situations.
Hired Auto Insurance: Protects a business against covered liability arising from vehicles it rents, hires, or leases for business purposes, subject to the applicable policy definition and lease restrictions.
Non-Owned Auto Insurance: Protects a business against covered liability arising from vehicles it does not own, such as employees' personal cars used for company business.
The purpose is to protect the business when it becomes legally responsible for injuries or property damage arising from the use of these vehicles.
It does not automatically insure the vehicle itself or replace the vehicle owner's automobile insurance.
Important insurance terms
SPF 6: The Standard Non-Owned Automobile Policy used in much of Canada to insure certain liability exposures arising from vehicles a business does not own. Provincial policy forms and requirements can differ.
Third Party Liability: Insurance for the insured's legal liability for injury, death, or property damage suffered by others because of an automobile accident.
Excess Liability: Coverage that responds above other applicable insurance according to the policy terms and rules governing priority of coverage.
Hired Auto Physical Damage: Additional coverage that may protect against damage to certain rented or hired vehicles. It is separate from ordinary liability protection.
Named Insured: The individual or organization identified as the insured party in the insurance contract. In business non-owned auto coverage, the company is typically the named insured.
Certificate of Insurance: A document summarizing specified insurance coverage, limits, and policy dates. Commercial clients may request one before allowing a contractor or service provider to begin work.
Hired Auto vs. Non-Owned Auto Insurance: What Is the Difference?
The main difference is how the business obtains or uses the vehicle.
|
Coverage |
Vehicle ownership |
Example |
Main protection |
|---|---|---|---|
|
Hired auto |
Rented or hired by the company |
A business rents a van for a delivery |
The company's covered liability arising from use of the hired vehicle |
|
Non-owned auto |
Owned by an employee or another party |
An employee drives their own car to visit a client |
The company's covered liability arising from use of that vehicle |
|
Owned commercial auto |
Owned by the business |
A company owns a delivery truck |
Vehicle liability and other purchased auto coverages |
|
Hired auto physical damage |
Rented or hired vehicle |
An employee damages a rented car |
Covered physical damage to the hired vehicle, if separately insured |
Example of hired auto insurance
A construction company in Vaughan rents a pickup truck for a short project because its regular vehicles are unavailable.
An employee driving the rented truck causes an accident that damages another vehicle and injures its occupants.
Hired auto liability coverage may protect the construction company against covered claims arising from the accident.
However, damage to the rented pickup truck itself requires separate consideration.
Example of non-owned auto insurance
A Toronto consulting firm does not own any vehicles.
Its employees regularly use their personal cars to visit clients across the Greater Toronto Area.
An employee causes an accident while driving to a scheduled client meeting. The injured party alleges that the employee and the consulting firm are legally responsible.
Non-owned auto liability insurance may provide protection for the firm's covered liability.
The employee's personal automobile insurance remains important and will commonly respond first, subject to applicable policy terms and priority rules.
What Does Hired and Non-Owned Auto Insurance Cover?
Hired and non-owned auto insurance primarily protects a business against certain legal liabilities arising from the use of vehicles it does not own.
The coverage typically addresses three main areas.
1. Bodily injury to other people
If a vehicle being used for company business causes an accident, the injured parties may pursue compensation for damages.
Depending on the claim, these damages can involve medical expenses, lost income, rehabilitation costs, and other legally recoverable losses.
If your business is held legally liable, hired and non-owned automobile liability coverage may respond, subject to the policy limit and conditions.
2. Damage to other people's property
Auto accidents can cause substantial property damage.
Examples include:
• An employee striking another vehicle while visiting a customer
• A rented delivery van damaging a commercial building
• An employee backing into a parked vehicle during a business errand
• A rented truck colliding with a fence or loading dock
The policy may cover the company's legal liability for damage to third party property.
3. Legal defence costs
Even when your company disputes responsibility for an accident, responding to a lawsuit can be expensive.
Coverage may include insurer arranged legal representation, defence expenses, and covered settlements or judgments.
The important distinction is that this insurance protects the business against covered liability. It does not automatically provide comprehensive insurance for every vehicle or driver involved.
Who Needs Hired and Non-Owned Auto Insurance in Canada?
Many businesses have automobile liability exposure without realizing it.
The most common examples involve employees using their own vehicles or companies renting vehicles temporarily.
Contractors and construction companies
Construction businesses frequently use employee owned vehicles to travel between job sites, purchase supplies, and attend inspections.
A contractor may own several company trucks but still have employees who occasionally use their personal vehicles for work.
Those vehicles create a separate exposure that should be considered within the company's contractor insurance program.
Professional services and consulting firms
Consultants, accountants, real estate businesses, insurance brokerages, and other professional firms often rely on employees' personal vehicles for client meetings.
A company may have no vehicle expenses beyond mileage reimbursements, yet still face liability arising from an employee's driving.
Retailers and delivery businesses
Retailers sometimes ask employees to deliver orders, transfer inventory between locations, or collect supplies using personal vehicles.
Delivery operations require particular attention because some personal auto insurers restrict or exclude commercial delivery activities.
Businesses providing regular delivery services should consider whether a dedicated commercial auto arrangement is more appropriate.
Transportation and logistics companies
Some transportation companies rely on owner operators, contracted drivers, or temporarily rented vehicles.
These arrangements may involve commercial auto liability, non-owned auto coverage, cargo insurance, and specific contractual insurance requirements.
Coverage for owner operators and independent contractors must be reviewed carefully rather than assuming every third party vehicle is covered.
Businesses with more complex transportation exposures should review their transportation and logistics insurance arrangements.
Property management companies
Property managers may send employees to inspect buildings, meet contractors, attend emergencies, or collect documents.
When employees use their personal vehicles for these activities, the management company can have non-owned automobile liability exposure.
Nonprofit organizations
Nonprofit organizations sometimes rely on employees or volunteers to transport supplies, attend events, or carry out organizational activities.
The use of volunteer owned vehicles should be disclosed to the insurer because coverage for volunteers and other nonemployees depends on the policy's insured persons and vehicle definitions.
Does an Employee's Personal Auto Insurance Cover Business Driving?
An employee's personal auto insurance may cover certain business driving activities, but the insurer must know how the vehicle is being used.
Occasional travel to client meetings and regular commercial deliveries do not necessarily receive the same insurance treatment.
For example, a salesperson who occasionally drives to a meeting may be eligible for coverage through an appropriately rated personal auto policy.
An employee making frequent deliveries may need a different vehicle insurance arrangement.
Aviva Canada's guidance explains that drivers should disclose work related vehicle use because the type and frequency of business activity can affect coverage.
What if the employee causes an accident?
The employee's own automobile policy will commonly provide the primary vehicle liability coverage.
If the business is also legally responsible, its non-owned auto insurance may provide additional protection according to the policy terms and applicable insurance priority rules.
Can the employer be held responsible?
Yes, depending on the circumstances.
For example, an employee may cause an accident while performing an assigned business task. The employer could face allegations that it is responsible for the employee's conduct.
An Ontario court has also recognized the SPF 6 policy as a form of insurance addressing a business's liability arising from automobiles it does not own.
A business should not assume that an employee carrying personal auto insurance eliminates the company's exposure.
Should employers require employees to carry their own insurance?
Yes. Businesses that permit employees to drive personal vehicles for work should establish clear insurance requirements.
These commonly include:
• Maintaining a valid driver's licence
• Carrying appropriate personal automobile insurance
• Disclosing business use to the personal insurer
• Meeting minimum liability limits established by the employer
• Reporting licence suspensions and relevant driving restrictions
• Reporting accidents occurring during business activities
The employer should document these requirements and periodically verify compliance.
What Is SPF 6 Non-Owned Automobile Insurance in Ontario?
In Ontario, a common insurance arrangement for businesses with non-owned automobile exposure is the Standard Non-Owned Automobile Policy, commonly called SPF 6.
This policy can insure a business against specified liability arising from the use or operation of automobiles it does not own.
It is particularly relevant for companies whose employees regularly use personal vehicles on company business.
SPF 6 coverage can also address certain hired automobiles, depending on the vehicle arrangement, applicable definitions, and endorsements.
Does SPF 6 replace commercial auto insurance?
No.
If your company owns vehicles, those vehicles generally require automobile insurance appropriate to their ownership and business use.
SPF 6 is intended to address defined non-owned vehicle exposures.
What about long term vehicle leases?
Long term leases require special attention.
For example, a vehicle leased by the company for several years should not automatically be treated the same as a car rented for a three day business trip.
Certain non-owned auto endorsements exclude or restrict long term leased automobiles. Other arrangements may require the business to insure the vehicle under an owner's automobile policy.
Before signing a lease, have your broker review the agreement, registration, insurance obligations, and intended use.
Is the same policy used across Canada?
Automobile insurance laws and policy forms differ by province.
The SPF 6 form is used in several Canadian jurisdictions, while Quebec has its own automobile insurance framework and corresponding forms.
Businesses operating across provincial borders should confirm how their coverage applies in each jurisdiction.
What Does Hired and Non-Owned Auto Insurance Not Cover?
Understanding exclusions is important because businesses sometimes purchase this coverage expecting it to insure every aspect of an accident.
Damage to an employee's personal vehicle
Non-owned auto liability generally does not cover repairing an employee's own vehicle after an accident.
The employee would typically rely on the applicable coverage under their personal automobile policy.
Damage to a rented vehicle
Hired auto liability does not automatically cover physical damage to the rented vehicle itself.
This requires separate consideration through hired auto physical damage coverage, an appropriate rental vehicle insurance arrangement, or another applicable source.
Company owned vehicles
Vehicles owned by the company generally require their own automobile insurance.
Hired and non-owned liability coverage is not a substitute for insuring company owned trucks, vans, and cars.
Tools, inventory, and cargo
Hired and non-owned auto liability generally does not insure goods and equipment being transported.
For example, a contractor transporting $30,000 worth of tools in a vehicle may require separate equipment floater coverage.
Businesses transporting customer goods may require cargo insurance.
Personal activities unrelated to the business
An employee driving their personal vehicle for unrelated private activities would not ordinarily trigger their employer's non-owned auto liability coverage.
Ordinary commuting also does not generally create the same business exposure as an assigned work trip.
Certain commercial transportation activities
Taxi operations, ridesharing, passenger transportation, and some delivery activities can have specialized insurance requirements.
Do not assume a standard non-owned automobile policy covers these operations.
Does Hired Auto Insurance Cover Damage to Rental Cars?
This is one of the most important coverage questions for Canadian businesses.
Hired auto liability and hired auto physical damage are two different protections.
Suppose an employee rents a car for a business trip and causes a collision.
There may be two separate financial exposures:
-
Liability for injuries or damage suffered by other people.
-
Physical damage to the rental vehicle and associated rental agreement obligations.
Hired auto liability addresses the first exposure when the business is insured and legally liable.
The second exposure may require an additional endorsement or separate insurance arrangement.
What should you check before renting?
Confirm:
• Who is named on the rental agreement
• Which employees are authorized to drive
• Whether the business has hired auto liability coverage
• Whether damage to the rented vehicle is insured
• The deductible and any relevant limits
• Whether loss of use or other rental company charges are covered
• Whether the rental period falls within the policy's permitted duration
Do not assume that a corporate credit card automatically provides all necessary vehicle insurance.
Is Hired and Non-Owned Auto Insurance Required by Law in Ontario?
Ontario requires vehicles operated on public roads to carry automobile insurance, subject to applicable legal requirements.
The Insurance Act establishes a minimum third party automobile liability limit of $200,000 for motor vehicle liability policies. This statutory minimum is not necessarily sufficient for commercial risks.
However, not every Ontario business is legally required to purchase a separate hired and non-owned automobile liability policy.
Coverage may nevertheless be required by a commercial contract, client agreement, or other business arrangement.
For example, a large customer might require a service provider to maintain automobile liability insurance covering owned, hired, and non-owned vehicles.
A business without company owned vehicles could still need non-owned automobile liability insurance to satisfy that requirement.
Does commercial general liability include non-owned auto coverage?
Not automatically.
Standard commercial general liability insurance generally excludes liability arising from the ownership, use, or operation of automobiles, subject to policy wording and exceptions.
Non-owned automobile liability coverage may be arranged under a separate automobile policy or through an approved extension to a commercial insurance program.
Review the actual coverage documents rather than relying on the general liability limit shown on a certificate.
How Much Does Hired and Non-Owned Auto Insurance Cost in Canada?
The cost depends on how your company uses vehicles, the number of employees driving for work, the types of vehicles involved, and the limits required.
A professional services company with occasional client visits generally presents a different exposure from a retailer making daily deliveries.
For businesses with limited vehicle use, non-owned auto liability may be a relatively modest component of their overall insurance cost.
Businesses with regular delivery operations, numerous drivers, or higher risk transportation activities may face more substantial premiums and underwriting requirements.
Factors that affect premiums
|
Pricing factor |
What insurers consider |
|---|---|
|
Number of drivers |
How many employees use non-owned vehicles for business |
|
Frequency of use |
Occasional meetings versus daily commercial driving |
|
Business activities |
Professional services, deliveries, construction, and transportation have different exposures |
|
Vehicle types |
Passenger cars, pickup trucks, vans, and heavier vehicles |
|
Hired vehicle exposure |
Rental frequency, rental costs, and duration |
|
Operating territory |
Local Ontario driving versus travel across Canada or into the United States |
|
Claims history |
Previous accidents and liability claims |
|
Liability limits |
Amount of liability insurance purchased |
|
Driver management |
Licence verification, driving policies, and safety procedures |
What information will insurers request?
Insurers may ask for:
• The company's business activities and annual revenue
• Number of employees who drive for work
• Frequency and purpose of business driving
• Types of vehicles used
• Estimated annual vehicle rental or hire expenses
• Whether deliveries or passenger transportation are involved
• Operating provinces and any United States exposure
• Prior automobile claims and requested coverage limits
Providing accurate information generally makes the quotation process more efficient and reduces the risk of coverage being arranged for the wrong activities.
How Much Non-Owned Auto Liability Insurance Should a Business Carry?
The appropriate liability limit depends on the potential severity of an accident and any commercial contract requirements.
Many businesses consider limits of $2 million or more, while some commercial contracts require $5 million or higher.
The amount should reflect the company's actual exposure.
Example: Employee accident with serious injuries
A consulting company permits employees to use personal vehicles for customer visits.
An employee causes an accident resulting in serious injuries. The injured party brings a substantial claim against the employee and the company.
The company's potential liability may exceed the amount available under the employee's personal automobile policy.
If the company has appropriate non-owned automobile liability coverage, its policy may respond to covered liability according to the applicable insurance terms and priority rules.
This example illustrates why businesses should evaluate the severity of potential claims rather than relying only on minimum insurance limits.
Common Hired and Non-Owned Auto Insurance Claim Scenarios
Scenario 1: Employee causes an accident while visiting a client
A sales representative uses their personal car to visit a client in Mississauga.
During the trip, they cause a collision that injures another motorist.
The injured person brings a claim against the driver and the employer.
Potential coverage: The employee's own automobile insurance and the employer's non-owned auto liability coverage, subject to the relevant policies and liability findings.
Scenario 2: Rented delivery van damages another vehicle
A retailer rents a cargo van for a temporary delivery project.
An employee driving the rented van strikes another vehicle.
The other driver alleges injury and property damage.
Potential coverage: Hired auto liability may protect the business against covered liability arising from the accident. Damage to the rented van must be addressed separately.
Scenario 3: Contractor uses an employee's pickup truck
A construction company asks an employee to use their personal pickup truck to collect materials from a supplier.
The employee causes an accident on the way back to the job site.
The injured party names the construction company in the lawsuit.
Potential coverage: Non-owned automobile liability may respond to the company's covered legal liability, provided the vehicle use falls within the policy.
The pickup truck's personal or commercial use insurance must also be appropriate for the activity.
Scenario 4: Business relies on an independent delivery contractor
A retailer hires an independent contractor to deliver customer orders.
The contractor causes an accident while performing the delivery.
The retailer is subsequently named in a claim.
Potential coverage: The outcome depends on the business's legal responsibility and the structure of its automobile insurance. A standard non-owned auto policy should not be assumed to automatically cover every independent contractor arrangement.
The contractor should carry appropriate automobile liability insurance, and the retailer should have its contractual and insurance exposures reviewed.
How to Reduce Non-Owned Auto Liability Risks
Businesses can reduce accident exposure and improve their insurance submissions by establishing clear procedures for employees who drive on company business.
Create a written employee driving policy
Your policy should identify:
• Who is authorized to drive for work
• Required automobile insurance limits
• Driver's licence requirements
• Permitted vehicle uses
• Rules concerning mobile phone use and distracted driving
• Accident reporting procedures
• Responsibilities for maintaining personal vehicle insurance
Verify insurance and licences
Require employees who drive regularly for work to provide appropriate evidence of insurance and a valid driver's licence.
Establish a process for reviewing these records periodically.
Make sure business use is disclosed
Employees should inform their personal automobile insurers about the nature of their business driving.
A vehicle used for occasional client meetings may be rated differently from one used for regular deliveries.
Review rental agreements
Before renting vehicles for business use, confirm that the insurance arrangement matches the rental agreement.
Pay particular attention to physical damage coverage, authorized drivers, rental duration, and liability limits.
Report operational changes
If your business begins offering deliveries, hires more travelling employees, or starts renting commercial vehicles regularly, tell your broker.
These changes can affect the type of insurance required.
Businesses should include non-owned vehicle exposure in their broader commercial insurance review rather than treating it as an isolated issue.
Common Mistakes That Create Non-Owned Auto Coverage Gaps
Assuming personal insurance always protects the employer
An employee's automobile policy does not automatically eliminate the business's liability exposure.
Assuming all business driving is excluded under personal auto insurance
Some personal insurers allow properly disclosed business use. Others restrict particular activities, such as regular deliveries. The correct arrangement depends on the vehicle use and insurer.
Not disclosing delivery operations
Daily deliveries create different risks from occasional business meetings.
The insurer should know whether employees transport goods or passengers for business purposes.
Confusing liability insurance with rental car damage coverage
A hired auto liability policy may protect against claims from other road users but may not cover repairing the rented vehicle.
Overlooking vehicles driven by independent contractors
Subcontracted transportation arrangements require separate attention to policy definitions, contractual responsibilities, and insurance carried by the contractor.
Using the wrong policy for long term leases
A vehicle leased for several years may require a different insurance structure from one rented for a short trip.
Assuming a certificate guarantees coverage
A certificate of insurance summarizes coverage but does not expand the underlying policy.
Read the applicable policy and endorsements.
Quick Hired and Non-Owned Auto Insurance Checklist
Before purchasing or renewing coverage, confirm:
• All company owned vehicles have appropriate automobile insurance.
• Employees using personal vehicles for work have disclosed their business use to their insurers.
• The company has non-owned automobile liability coverage where needed.
• Hired auto liability applies to the vehicles the business rents or hires.
• Rental vehicle physical damage coverage has been reviewed separately.
• The policy addresses the company's actual delivery, contracting, and transportation activities.
• Liability limits satisfy relevant contracts and business risk requirements.
• Independent contractor vehicle arrangements have been reviewed.
• Employee driving policies and licence verification procedures are in place.
• Claims reporting responsibilities are clearly established.
Frequently Asked Questions About Hired and Non-Owned Auto Insurance
Do I need non-owned auto insurance if my company has no vehicles?
You may need it if employees use their personal vehicles for business activities. A company can face automobile related liability without owning a vehicle.
Does non-owned auto insurance cover employees' personal cars?
Non-owned auto liability primarily protects the business against covered legal liability. It generally does not pay to repair an employee's own vehicle. The employee requires appropriate automobile insurance for their vehicle.
Is hired and non-owned auto insurance required for small businesses in Ontario?
There is no universal requirement for every small business to purchase a separate non-owned auto policy. However, businesses with employees driving personal vehicles for work should consider the exposure. Commercial contracts may also require the coverage.
Does hired auto insurance cover rental cars?
Hired auto liability can protect the business against certain third party liability claims involving rented vehicles. Physical damage to the rental vehicle generally requires separate coverage or another appropriate insurance arrangement.
Is non-owned auto insurance included in commercial general liability?
Not necessarily. Automobile liability is commonly excluded from standard commercial general liability coverage. A separate policy or appropriate endorsement may be needed.
Does non-owned auto insurance cover commuting?
Ordinary travel between home and a regular workplace generally does not create the same employer automobile liability exposure as driving on assigned company business. The circumstances of a particular trip still matter.
Does hired and non-owned auto insurance cover independent contractors?
Coverage depends on the policy definitions, vehicle arrangement, and business's legal liability. Do not assume every independent contractor's vehicle is automatically insured.
Can I buy non-owned auto insurance without commercial fleet insurance?
Yes. Businesses that do not own vehicles may be able to arrange non-owned automobile liability coverage without purchasing an owned vehicle fleet policy.
Does non-owned auto insurance cover deliveries?
Some policies can address appropriate delivery exposures, but regular commercial deliveries may require different underwriting or dedicated automobile insurance. The business must disclose these activities.
How much hired and non-owned auto liability coverage should I purchase?
The appropriate limit depends on the nature of the business, frequency of driving, potential claim severity, and contractual requirements. Businesses commonly evaluate $2 million or higher liability limits, but the correct amount should be determined through a review of actual operations.
Request a Hired and Non-Owned Auto Insurance Quote or Book a Meeting
Your business can face automobile liability even when it does not own any vehicles.
If employees use personal cars for work, your company rents vehicles, or you rely on third party drivers, Boardwalk Insurance can help review the exposures and determine what automobile liability coverage may be appropriate.
We help businesses across Ontario, including Toronto, Vaughan, Mississauga, Brampton, Markham, Oakville, Hamilton, and surrounding communities, compare commercial automobile insurance options.
Whether you need a standalone non-owned automobile liability policy, coverage for rented vehicles, or a broader commercial auto program, our team can review your current insurance and contractual requirements.
Request a Hired and Non-Owned Auto Insurance Quote to discuss your business's coverage needs.
What We Need From You
• Your legal business name and primary operating locations
• Description of your business activities and how vehicles are used
• Number of employees who use personal vehicles for work
• Types of vehicles used and whether deliveries or transportation services are involved
• Estimated annual vehicle rental expenses and details of any longer leases
• Current insurance policies and any contractually required liability limits
• Previous automobile claims, accidents, and relevant claims history
