Hired and non-owned automobile (HNOA) coverage is important insurance coverage that is usually not very expensive. A hired auto is a rented vehicle used for company business—not common for a real estate brokerage. The non-owned coverage, however, can apply to employees’ and agents’ vehicles when being used on behalf of the real estate brokerage. This coverage protects the firm if it is brought into a claim.
HNOA insurance can provide coverage over the limit carried by the employee and agent. A broker may want to require all employees and agents to carry minimum liability limits of $100,000 per person and $300,000 per accident as well as $100,000 in property damage coverage. Some firms require the firm be added onto each agent’s insurance policy. In most cases, a firm is being added as an additional interest, not an additional insured. This means the policy will not cover the firm or broker but will notify you if the policy is canceled.
Consider this case study of an agent on her way to a listing appointment who turned left in front of an oncoming vehicle, causing significant injuries. The person in the other car incurred medical bills in excess of $1 million and filed a claim against the brokerage firm. The brokerage had HNOA coverage. The brokerage’s insurance company argued that the agent was not an employee and not in the scope of working for the company at the time of the accident. The other party argued that the brokerage was negligent in allowing the agent to drive for work when she had two prior accidents.
The brokerage’s insurance company paid $150,000 to settle the claim. Without the non-owned coverage, the brokerage would have had to pay out-of-pocket. The real estate firm was paying $200 per year for the coverage but now will have to pay a higher premium. It would have taken more money to settle the claim if the agent had been driving under the influence or with a prior DUI on her record.
This case also raises the question about whether a real estate firm is obligated to check the driving records of agents prior to engagement. The answer is cautiously yes. Firms should only run the driving record if they are willing to have a policy that states agents cannot join the firm if their driving is unacceptable.
Hired and non-owned auto coverage can often be added to a business owners or general liability policy for under $200 a year. You should review your policy to confirm you have the coverage. If you have a business auto policy, it can be added there was well.