Trucking companies don’t own every vehicle they depend on — and that gap carries real risk. Many carriers use a combination of leased trucks, owner-operators and even rented vehicles to support a variety of business needs over the course of a year.
While these arrangements offer flexibility, they can also create significant exposures. Without the right processes and protections in place, trucking companies can actually be held responsible for accidents, injuries or other losses involving vehicles they do not own.
The solution is an insurance protection known as Hired or Non-owned Auto (HNOA) liability.
How does HNOA liability work?
HNOA liability coverage can be extremely helpful for the following scenarios where trucking companies rely on non-owned vehicles:
- Owner-operator trucks operating under the carrier’s authority;
- Leased or rented trucks used to meet temporary demand;
- Employee-owned vehicles used for work-related tasks; and
- Contractor vehicles used for deliveries or other services.
In the event of an accident, the driver’s personal or primary commercial auto insurance is typically the first layer of protection. However, that coverage may not be sufficient, as more and more personal auto policies exclude coverage when a vehicle is used for business purposes.
What’s more, if a claim exceeds the driver’s policy limits, victims or their attorneys may go after the trucking company itself, since the driver was operating on behalf of the company.
If an employee, contractor or owner-operator causes an accident while performing work on the company’s behalf, only a carrier with an HNOA policy will have protection.
How can a carrier leverage technology to manage HNOA risk?
Today, the rising frequency and severity of auto accidents mean that businesses deemed liable may pay more and that litigation lasts longer. For example, the number of commercial vehicle accidents is increasing in Michigan, with accidents involving trucks increasing by 5% between 2023 and 2024.
What’s more, carriers working with non-owned vehicles face a variety of challenges, including:
- Verifying commercial licenses and other qualifications;
- Confirming insurance coverage;
- Monitoring current driver behavior; and
- Ensuring compliance with company policies and other safety requirements.
These challenges are compounded when drivers operate across different regions or across borders.
Balancing compliance, safety and insurance costs requires a structured approach to managing these exposures. Yet this can be made easier by adopting a technology solution to coordinate it all.
Fleet and driver management platforms can streamline processes by:
- Automating driver onboarding and documentation;
- Conducting compliance and credential checks;
- Monitoring driver behavior through telematics; and
- Providing real-time visibility into insurance coverage.
By centralizing the data, trucking companies can demonstrate stronger safety practices, improve operational oversight and potentially reduce insurance costs over time. They can also better manage HNOA-related risks, whether drivers are long-term contractors or temporary hired help.
Here are the best practices to manage HNOA-related risk.
As you take steps to better protect your organization — and its bottom line — from HNOA-related risk, it’s important to develop a risk management protocol.
Consider these best practices to help your organization to reduce its exposure:
- Verify insurance for owner-operators and contractors.
Before working with any new driver, require proof of adequate commercial auto coverage and ensure policies meet minimum liability limits before allowing drivers to operate under your authority.
- Monitor driver qualifications and safety records.
Regularly review all driver records, licensing status and safety performance to identify potential risk factors early.
- Introduce compliance checks.
Ensure drivers meet all necessary training, licensing and regulatory requirements before allowing them to operate on behalf of the company.
- Create a contract with clear requirements.
Introduce a standard contract that clearly outlines insurance obligations, safety expectations and compliance standards with any owner-operator or other driver.
- Maintain adequate HNOA coverage.
In today’s litigious society, the liability gap is a real one – and no trucking company can afford to ignore it, even with other risk mitigation strategies in place. Work with your insurance advisor to secure appropriate HNOA coverage or to ensure that your existing policy aligns with all current operational risks. Be sure you understand what you’ll be responsible for overall — and protect your entire business at the same time.
The exposures for trucking companies will only increase over time. By combining strong internal controls with the right HNOA coverage, you can close coverage gaps, strengthen safety oversight, and better protect your business.
Dan Wilhelm, CIC, is the transportation practice leader for global insurance brokerage Hub International. He has more than 25 years of insurance experience, and a strong entrepreneurial background. He specializes in complex risk for all lines of coverage for middle market and large accounts related to automobile, construction, manufacturing, food processing, distribution and transportation. He is licensed in property and casualty as well as life and health. Dan helps develop cost-effective and comprehensive insurance programs for all areas of coverage.
