My pizza insurance

Non-Owned Auto Liability Insurance

is designed to protect a business from the risk of having employees drive their own vehicles on company business. An easy scenario to illustrate the risk: An employee is on a delivery run and runs over a pedestrian; the employee is at fault. The dead pedestrian’s family hires a smart attorney who then sues both the employee and the employer for damages sustained. You now have a potential non-owned auto claim; without this coverage your business assets may be on the line.

Assuming that the employee was driving his/her own vehicle, which insurance policies are in play, and in what order?

1. The primary auto policy that is in place on the vehicle being driven is always the first in line for liability, and is the only policy that will fix the employee’s car. After the limits of liability on the personal auto policy are exhausted, then the non-owned auto liability policy takes over. Most non-owned auto policies are written on a duty to defend policy form, which means that the insurance company provides the defense attorneys and manages the case.


2. Assuming that the case settles or the insured loses in court, then the judgments are paid in the following order: 

  • 100% of the judgment against the business, subject to policy limits,
  • 100% of the judgment against the additional insured employee, again subject to policy limits.

The order of policies and their intent brings up several issues, as follows:

The employee needs to make sure that their auto insurance will extend to incidental transportation for a work purpose. It is recommended that each employee contact their insurance company and let them know the extent of their on-the-job driving. Some insurance companies will require a business use rider, which will specifically endorse the policy for incidental business use of a personally owned vehicle.


The best time to clarify with an insurance company is prior to an accident, not when the vehicle is a smoking wreck and the insurance adjuster is searching for any way to get out of paying the claim.

You as the employer, need to protect against an employee NOT KNOWING that they are at risk of an unpaid personal auto insurance claim.

The importance of hiring safe drivers

One of the easiest things you can do to protect your assets as a business owner is to have the correct insurance.  

We have developed a program to help you hire the right drivers 

Koele Insurance & Real Estate
1110 Main St.Hull, IA51239US
Phone: 7124391122 Website: