If your restaurant uses employee vehicles for deliveries, catering runs, or supply pickups, you might assume your commercial auto policy or employees' personal auto policies have you covered. In many cases, they don't. That's where Hired & Non-Owned Auto (HNOA) insurance comes in.
At Anchor Insurance, we help restaurant owners identify this hidden gap in coverage and find the right HNOA policy by shopping multiple carriers and explaining how this coverage works alongside your existing insurance.
What is Hired & Non-Owned Auto Insurance?
Hired & Non-Owned Auto insurance is a form of liability coverage that protects your business when:
- Non-Owned Auto: An employee uses their personal vehicle for business purposes (deliveries, catering runs, bank deposits, supply pickups)
- Hired Auto: You rent or borrow a vehicle for business use (rental trucks for catering events, borrowed vehicles for temporary needs)
HNOA coverage is liability-only insurance. It covers bodily injury and property damage your business becomes legally liable for when an employee driving a non-owned or hired vehicle causes an accident. It does not cover damage to the employee's vehicle or the hired/rented vehicle itself.
The Hidden Gap: Where Personal Auto Policies Fall Short
Most restaurant owners believe their employees' personal auto insurance will cover any accidents that happen during deliveries. That's only partially true. Here's what actually happens:
Personal Auto Policies Have Business Use Exclusions
When your employee is using their personal car to deliver food or transport catering equipment, they are using the vehicle for commercial purposes. Many personal auto policies:
- Explicitly exclude business use
- Provide reduced limits for business activities
- May deny coverage entirely if the insurer determines the vehicle is being used for commercial delivery
If the employee's personal policy denies the claim or provides insufficient limits, your restaurant can be held directly liable for the damages - and your Business Owners Policy (BOP) or General Liability policy won't cover it.
What Your Commercial Auto Policy Doesn't Cover
If you have a commercial auto policy for company-owned delivery vehicles, it only covers those specific vehicles listed on the policy. It does not extend to:
- Employee-owned vehicles used for business purposes
- Rental vehicles not listed on your commercial auto schedule
- Borrowed vehicles from vendors, suppliers, or other third parties
The Gap: When Something Goes Wrong
Here's a real-world scenario: Your server uses their personal car to deliver a catering order. On the way back, they run a red light and cause a serious accident. The injured party sues for $500,000 in medical bills and lost wages.
- The employee's personal auto policy has a $100,000 per-person liability limit and may try to deny coverage due to business use
- Your commercial auto policy doesn't cover the vehicle because it's not listed on the policy
- Your BOP's general liability coverage excludes auto liability
Without HNOA coverage, your restaurant is exposed to a $400,000+ gap in liability protection.
Which Restaurants Need HNOA Coverage?
You should consider HNOA if your restaurant:
- Offers in-house delivery using employee-owned vehicles (even part-time or occasionally)
- Provides catering services where staff transport food, equipment, or supplies in personal vehicles
- Sends employees on errands like bank deposits, supply runs to vendors, or emergency ingredient pickups
- Uses third-party delivery platforms inconsistently and sometimes has employees deliver directly to supplement peak hours
- Rents vehicles occasionally for special events, large catering jobs, or temporary equipment transport
Even if delivery isn't your primary revenue source, occasional use of employee vehicles for business purposes creates enough exposure to justify HNOA coverage.
What Does HNOA Actually Cover?
HNOA insurance provides liability protection for your business when an employee or hired driver causes an accident while driving a non-owned or hired vehicle for business purposes. Specifically, it covers:
- Bodily injury liability: Medical expenses, lost wages, and legal costs if someone is injured in an accident caused by your employee
- Property damage liability: Repair or replacement costs if the accident damages another person's vehicle or property
- Legal defense: Attorney fees, court costs, and settlements or judgments against your business
What HNOA does NOT cover:
- Physical damage to the employee's vehicle or the hired/rented vehicle
- Cargo or goods being transported
- Workers' compensation for the employee driving the vehicle
- Accidents that occur outside of business use (commuting, personal errands)
How HNOA Works Alongside Your Other Restaurant Insurance
HNOA is designed to fill gaps in your existing coverage, not replace it. Here's how it fits with your other policies:
HNOA + Personal Auto Insurance
If your employee's personal auto policy covers the accident (and doesn't deny it due to business use), that policy pays first (it's primary). HNOA acts as excess coverage and kicks in only if the personal policy limits are exhausted or if the claim is denied due to business use.
HNOA + Commercial Auto Policy
If you own delivery vehicles and have a commercial auto policy, HNOA still covers non-owned and hired vehicles not listed on that policy. For example, if you own two delivery cars but have five employees who occasionally deliver in their personal vehicles, HNOA covers the three employees not driving company cars.
HNOA + Business Owners Policy (BOP)
Some BOPs include HNOA as an optional endorsement or add-on. If your BOP doesn't include it, you'll need to purchase standalone HNOA coverage or add it via endorsement. Either way, HNOA specifically addresses auto liability, which is excluded from your BOP's general liability section.
Frequently Asked Questions
Do I need HNOA if my employees use DoorDash or Uber Eats?
It depends. If 100% of your delivery orders go through third-party platforms and your employees never use their own vehicles for business purposes, you may not need HNOA. However, if your employees occasionally deliver directly (for catering, special orders, or during platform outages), or if they run business errands in personal vehicles, you should have HNOA coverage. We'll help you evaluate your actual delivery practices and exposure.
What if my employee already has commercial auto insurance?
That's rare for employees using personal vehicles. Most personal auto policies specifically exclude business use. Even if an employee has purchased a business use endorsement on their personal policy, HNOA is still valuable because it protects your restaurant as an additional layer of coverage if the employee's policy limits are insufficient.
Does HNOA cover me if I borrow a friend's truck for a catering event?
Yes, that's exactly what the "hired auto" portion of HNOA covers. If you borrow, rent, or lease a vehicle for business use and an accident occurs, HNOA provides liability coverage for your business.
How much does HNOA cost for a restaurant?
HNOA is typically one of the more affordable commercial coverages. For many small restaurants, annual premiums range from $300 to $1,200, depending on factors like the number of employees, frequency of deliveries, delivery radius, and claims history. Because it's liability-only coverage and doesn't insure the vehicles themselves, the cost is generally much lower than commercial auto insurance.
Can I add HNOA to my existing BOP or general liability policy?
Often, yes. Many carriers allow HNOA to be added as an endorsement to your Business Owners Policy (BOP) or standalone general liability policy. In some cases, you may need to purchase it as a separate policy. At Anchor, we'll determine the most cost-effective way to structure your HNOA coverage based on your current policies and carrier options.