If your restaurant handles deliveries or uses vehicles for business, you've probably heard you need auto insurance - but which kind? Hired & Non-Owned Auto (HNOA) and Commercial Auto are two very different coverages that solve different problems.
At Anchor Insurance, we help restaurant owners figure out which coverage they actually need based on their delivery model, vehicle ownership, and risk exposure - not based on a one-size-fits-all sales pitch.
HNOA vs. Commercial Auto: Quick Comparison
Here's the fundamental difference between these two policies:
Hired & Non-Owned Auto (HNOA)
- Liability-only coverage
- Covers vehicles you don't own (employee-owned, rented, borrowed)
- Protects your business from liability when employees use personal vehicles for work
- Does not cover damage to the vehicles themselves
- Relatively inexpensive ($300-$1,200/year for most restaurants)
Commercial Auto
- Full coverage (liability + physical damage)
- Covers vehicles your business owns or leases
- Required if you own delivery vehicles, catering vans, or company cars
- Covers both liability and damage to your vehicles
- More expensive ($1,200-$5,000+ per vehicle annually)
When Does Your Restaurant Need HNOA?
You need HNOA if:
- Employees use personal vehicles for deliveries - even occasionally or during peak hours when third-party platforms are slow
- Staff runs business errands in personal cars - bank deposits, supply pickups, emergency ingredient runs, vendor visits
- You rent or borrow vehicles occasionally - renting a truck for a catering event, borrowing a supplier's van for transport
- You offer catering and employees drive their own vehicles to deliver equipment, food, or setup materials
HNOA is essential even if you also own company vehicles, because it covers the vehicles your commercial auto policy doesn't - the non-owned and hired ones.
When Does Your Restaurant Need Commercial Auto?
You need Commercial Auto if:
- You own or lease delivery vehicles - cars, vans, trucks registered to your business and used for deliveries or operations
- You operate a fleet of vehicles - multiple delivery cars for in-house delivery operations
- You need physical damage coverage - to repair or replace company-owned vehicles after accidents, theft, or weather damage
- You are required by a lender or lease agreement - lenders typically require commercial auto if you financed a vehicle for business use
Commercial auto is required by law if you own vehicles titled to your business. You cannot legally operate company-owned vehicles without it.
When Do You Need Both HNOA and Commercial Auto?
Many restaurants need both policies if they:
- Own some delivery vehicles but employees also use personal cars - for example, you own two delivery vehicles but have five employees who occasionally deliver
- Rent vehicles for special events - you own a catering van but occasionally rent a larger truck for big events
- Have a hybrid delivery model - company vehicles handle most deliveries, but employees use personal cars during peak hours or for small orders
In these scenarios:
- Commercial Auto covers the vehicles your business owns or leases
- HNOA covers liability when employees use personal or rented vehicles
What Each Policy Actually Covers
Hired & Non-Owned Auto (HNOA) Coverage
HNOA provides:
- Bodily Injury Liability: Medical expenses, lost wages, and legal costs if someone is injured in an accident caused by an employee driving a non-owned or hired vehicle
- Property Damage Liability: Repair or replacement costs if the accident damages another person's vehicle or property
- Legal Defense: Attorney fees, court costs, settlements, and judgments against your business
HNOA does NOT cover:
- Physical damage to the employee's personal vehicle
- Physical damage to rented or borrowed vehicles (rental companies typically require you to purchase their CDW/LDW)
- Cargo, food, or goods being transported
- Medical payments for the employee driving
Commercial Auto Coverage
Commercial Auto provides:
- Liability Coverage: Bodily injury and property damage liability if your company vehicle causes an accident
- Collision Coverage: Pays to repair or replace your vehicle after a collision
- Comprehensive Coverage: Covers damage from theft, vandalism, fire, weather, falling objects
- Medical Payments: Covers medical expenses for the driver and passengers in your vehicle
- Uninsured/Underinsured Motorist: Protects your business if hit by a driver with no insurance or insufficient coverage
Commercial Auto does NOT cover:
- Vehicles not listed on the policy (employee-owned vehicles)
- Personal use of company vehicles (in most policies)
- Cargo or business property (requires separate inland marine or cargo coverage)
Cost Comparison: HNOA vs. Commercial Auto
HNOA Cost
For most restaurants, HNOA is very affordable:
- Typical range: $300 to $1,200 per year
- Pricing factors: Number of employees, delivery frequency, delivery radius, claims history
- Why it's cheaper: It's liability-only and doesn't insure the vehicles themselves
Commercial Auto Cost
Commercial auto is significantly more expensive:
- Typical range: $1,200 to $5,000+ per vehicle per year
- Pricing factors: Vehicle value, driver records, coverage limits, deductibles, delivery volume, territory
- Why it's more expensive: Covers both liability and physical damage to the vehicles, which are expensive assets
How to Decide: HNOA, Commercial Auto, or Both?
Use this decision framework to determine what you need:
Do you own or lease any vehicles for business use?
- Yes → You need Commercial Auto (required by law and lenders)
- No → Continue to the next question
Do employees ever use personal vehicles for business?
- Yes → You need HNOA
- No → Continue to the next question
Do you rent or borrow vehicles for business?
- Yes → You need HNOA
- No → You may not need either (but verify with your broker)
Summary Table
Your delivery setup determines your coverage:
- 100% third-party delivery, no employee vehicles, no company vehicles → Neither HNOA nor Commercial Auto required (but check with your broker)
- Employees use personal cars for deliveries or errands → HNOA required
- You own delivery vehicles → Commercial Auto required
- You own vehicles AND employees use personal cars → Both HNOA and Commercial Auto required
Why Work with Anchor Insurance to Compare Your Options
Choosing between HNOA and Commercial Auto isn't always straightforward. At Anchor Insurance, we:
- Analyze your actual delivery operations - not just what you think you need, but what you're actually exposed to
- Shop multiple carriers - different insurers price HNOA and Commercial Auto very differently for restaurants
- Structure your coverage efficiently - sometimes HNOA can be added as a low-cost endorsement to your BOP; sometimes it needs to be standalone
- Explain the trade-offs - we help you understand where you're covered, where you're not, and what the financial impact of each option is
Frequently Asked Questions
Can I just add drivers to my commercial auto policy instead of buying HNOA?
No. Commercial auto policies only cover vehicles listed on the policy (owned or leased by your business). They do not cover employee-owned vehicles, even if you add the employee as a driver. HNOA is specifically designed to cover non-owned and hired vehicles.
If I have HNOA, do I still need commercial auto?
Yes, if you own or lease vehicles. HNOA is liability-only and does not cover physical damage to vehicles or provide coverage for company-owned vehicles. Commercial auto is legally required for business-owned vehicles.
Does HNOA cover rental cars?
HNOA covers liability when you rent a vehicle for business use. However, it does not cover physical damage to the rental vehicle itself. You'll typically need to purchase the rental company's Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) to cover damage to the rental car.
What if my employee has an accident in their personal car during a delivery?
If the employee is making a delivery for your restaurant, their personal auto policy may deny coverage due to business use. If the claim exceeds the employee's personal policy limits (or is denied), HNOA kicks in to cover your restaurant's liability. This is why HNOA is critical even if your employees have personal auto insurance.
How do I know if my current policy includes HNOA?
Check your Business Owners Policy (BOP) or General Liability policy declarations page. Look for an endorsement or coverage section labeled "Hired & Non-Owned Auto Liability." If you don't see it, you likely don't have it. We can review your current policies and identify gaps.