Non Owned Auto Insurance

Okay everyone, I know I have posted on here in the past about getting a non owned auto, and I have since gotten a policy ready to go for non owned auto coverage. I haven’t finalized it because I have one problem:

They told me that the driver’s automobile damage would not be covered under the policy. They said that the driver’s insurance would have to cover damage to their auto, and that the non owned policy would cover anything over and above that.

The problem lies in the fact that many of my drivers aren’t covered while delivering pizza. Which means, if they were in an accident and their car was damaged, they would have 0 coverage for the damage from either their insurance or my insurance.

Is this how other policies are set up, or is it something that I am getting ripped off on? Is it something that I will have to have my drivers get specific coverage for pizza delivery, and I will reimburse them for the extra coverage? I’m just trying to find out how other people do this, because anywhere I turn I seem to be running into a brick wall. Any help would be appreciated so that I can get this worked out and make sure that I am covered.


I would also like some information on this from angent that can write the appropriate insurance in AZ.

You are not getting ripped off. Hired and Non-owned coverage that YOU buy covers YOU and YOUR business. It does not cover or protect your drivers in any way. That is it. Your drivers need to buy whatever kind of coverage the law requires and they decide will serve their needs. If the policy THEY have will not cover THEM while delivering pizza, THEY should shop for new coverage.

Your mileage payment to them for driving their own cars to deliver product is not itended to be income to them and is not taxable as such (assuming you pay it by method acceptable to the IRS). Out of that mileage, they buy gas, new tires, oil changes, replacement expense and, yes, insurance. If they have a car worth insuring for collision they should buy that coverage. The mileage paid in most places covers those expenses very nicely and the IRS changes the allowable amount regularly to reflect the changing cost of fuel.

My solution was to buy company cars. In the end it was cheaper than paying mileage and buying hired and non-owned coverage and it allows me to hire drivers that do not own cars.

How does the cost of insuring company-owned autos compare to non-owned insurance. I had always assumed the insurance costs (full coverage vs. a secondary liability) would be prohibitive… maybe I should reexamine this?

Company cars can be a great solution. I’m not dismissing it BUT do also remober that:

a) drivers don’t really care about a car they don’t own; they will usually treat it harshly and you’ll need to repair it and service more often - not forgetting the extra bumps and scratches

b) You will need to check the car daily and have very regular services (more than normal). You have a responsibility to make sure the car is totally road worth each and every day.

Non owned automobile insurance is “liability insurance” and not “physical damage insurance”…It covers you in the event an automobile under contract to you get in an accident and you and the car owner gets sued…You may not have any liability in the end, however, the defense costs could crush you…That is were the “non owned auto” policy comes to the rescue…That policy will pay most of your costs to defend yourself…

I found that owned coverage was the same price as non-owned (assuming no collision coverage). I guess the insurance companies just figure you will be sued no matter what and price it the same. I buy used, medium/high mileage subarus. Even with $2000 per car per year for repairs I come out ahead.

Yes, you have to figure in wear and tear, maintainance, etc etc. We have a daily inspection form the driver fills out with beginning and ending mileage, oil, check lights, brakes etc etc. We have been doing this now for going on 6 years. All in all I save a couple of thousand a year but the main thing is that I am not at the mercy of my employees cars and can hire people whether or not they have a car.

Ok, so I agree with what you all are saying. The newest problem (after doing some digging today) is that my non owned auto insurance company says that the physical damage to the drivers auto is covered under their policy regardless of whether they are delivering or not. The liability is what is not covered in some cases, and that is where my non owned auto policy would kick in. My driver’s insurance company says that they can’t say for sure that it would be covered, it would depend on the situation and what not, which means that he doesn’t want to work for us if he’s not 100% he’s covered (I don’t blame him).

Any comments or suggestions?

Also, I figured up that for me, it’s not worth it to have my own cars at this point. If I had the cash to purchase 2 vehicles w/o loan, and I took about 100 more drives per month, it would be worth it for me. I am thinking of doing it in the future. For now, I need to get this figured out.

Your driver needs to get insurance that will cover himself and his car. You can not solve that for him. YOUR policy will cover YOU for liability, it will not cover your driver.

The cars we use cost us about 3K each. For that, I can find clean 8-10 year old Subaru station wagons with 100K miles on them. We run them for a year or two and sell them for $1000-$1500.

Thanks for the help guys.