Washington Hired and Non-Owned Auto Insurance

Every time an employee swings by a client meeting in a personal sedan, or the marketing team rents a minivan for an out-of-town trade show, a business in Washington is exposed to auto-related liability that its standard commercial auto policy might not cover. Hired and non-owned auto insurance (often shortened to HNOA) is designed to bridge exactly that gap. Yet despite its importance, many business owners and nonprofit directors have only a hazy idea of what the coverage is, who needs it, and how Washington law and market conditions affect the premiums.

This article untangles those issues in plain language, combining Washington-specific data with practical guidance. By the end, managers, founders, risk officers, and even independent contractors will know how to determine whether HNOA coverage is needed, how much protection makes sense, and how to keep costs in check without leaving dangerous blind spots.

Washington’s economy depends heavily on small and midsized businesses. According to the U.S. Small Business Administration, more than 99% of Washington companies fit the “small” designation, and roughly 1.4 million workers are employed by those firms. A significant share of those employees occasionally use personal or rented vehicles for job duties—whether that means delivering documents across town, grabbing supplies at a hardware store, or chauffeuring visiting executives.

When an accident happens during such a trip, the injured third party will often sue every party tied to the driver, including the employer that asked the employee to run the errand. If the employer lacks HNOA coverage, it may have to rely on the driver’s personal auto policy, which may have low limits, business-use exclusions, or an insurer that simply refuses to defend the employer. In 2022, the average bodily injury liability claim in Washington topped $21,000, based on Insurance Research Council estimates, while jury verdicts regularly soar into six and seven figures. Those numbers make even a minor oversight financially devastating.

Local Accident Statistics

The Washington State Department of Transportation recorded more than 103,000 reported crashes in 2023, including 2,276 serious injury collisions and 670 fatal accidents. King, Pierce, and Snohomish counties—where commercial activity is dense—accounted for almost half of the state’s crash volume. Although precise data on business-use collisions is limited, national studies from the National Highway Traffic Safety Administration suggest that roughly 12% of reported crashes involve a vehicle being operated for work purposes. Translated to Washington’s 2023 numbers, that implies close to 12,000 crashes with potential employer liability each year—hardly a hypothetical risk.

In addition to the financial implications, the emotional toll of an accident can be significant for all parties involved. Employees may face stress and anxiety following an incident, particularly if they feel responsible for the damages or injuries caused. Employers, too, may find themselves grappling with the aftermath, including potential damage to their reputation and employee morale. Furthermore, the legal complexities surrounding liability can lead to prolonged court battles, diverting valuable resources and attention away from core business operations. This underscores the importance of not only having HNOA coverage but also ensuring that employees are adequately trained on safe driving practices and the proper use of vehicles for work-related tasks.

Because Washington follows a pure comparative negligence rule, defendants can be found liable even when only partially at fault. An employer might be assessed 10%, 20%, or 50% of damages depending on the case details. Without HNOA coverage, the company’s balance sheet is on the hook for its share of the judgment plus legal fees. This can lead to a cascading effect on the business, potentially impacting its ability to invest in growth, hire new employees, or maintain a stable cash flow. As such, understanding the nuances of HNOA coverage becomes not just a legal necessity but a strategic business decision that can safeguard the future of a company in Washington's competitive landscape.

Hired autos are vehicles a business rents, leases, or borrows that the company does not own. The category ranges from a one-day rental car to a long-term leased pickup truck. Non-owned autos are personal vehicles that employees, partners, or volunteers use on behalf of the organization. In both situations, legal responsibility attaches because the vehicle is being used to advance the employer’s interests, even if the employer never touches the keys.

Examples include a salesperson driving her own SUV to multiple client sites, a volunteer delivering meals in his hatchback for a nonprofit, or a property manager renting a cargo van for weekend furniture deliveries. A key detail: commuting to and from work is generally not considered business use, whereas any trip that serves the company’s goals typically is.

Understanding the nuances of hired and non-owned auto use is crucial for businesses, especially when it comes to insurance coverage. Many companies opt for a non-owned auto liability policy to protect themselves from potential lawsuits arising from accidents involving employees' personal vehicles. This type of coverage can help mitigate the financial risks associated with accidents that occur while employees are performing work-related tasks, ensuring that both the business and its workers are adequately protected in the event of an incident.

Moreover, businesses should also consider implementing clear policies regarding the use of hired and non-owned vehicles. This can include guidelines on who is authorized to drive these vehicles, how to report accidents, and the importance of maintaining proper insurance coverage. By establishing these protocols, organizations can foster a culture of safety and accountability, ultimately reducing the likelihood of accidents and ensuring that employees are aware of their responsibilities while using vehicles for business purposes.

Washington does not mandate that private entities carry HNOA coverage, but the state’s financial responsibility law (RCW 46.29) sets minimum liability limits that apply once a company is found responsible for a vehicle accident. Additionally, any contract with state agencies often requires vendors to add HNOA limits of at least $1 million. Municipalities such as Seattle and Tacoma impose similar clauses in procurement agreements, reflecting growing awareness of the exposure.

When transporting passengers for a fee, the regulatory landscape tightens. For example, transportation network companies (TNCs) and their drivers must satisfy RCW 48.177.010, which stipulates $1 million in combined single-limit coverage anytime a ride is in progress. Many fleet operators meet that obligation through primary commercial auto insurance, but businesses that depend on non-owned vehicles (e.g., independent contractors) can only fulfill the requirement through HNOA endorsements or separate policies.

Vicarious Liability and Negligent Entrustment



Washington courts often cite the doctrines of vicarious liability and negligent entrustment. Under vicarious liability, employers are responsible for wrongful acts employees commit within the scope of employment. Negligent entrustment applies when a company “should have known” a driver was unfit—say, an expired license or impaired driving history—and let them drive anyway. Insurers draft HNOA policies with these doctrines in mind, providing defense costs and indemnity up to the purchased limits.

Two broad categories of organizations benefit from HNOA coverage:

1. Companies without a fleet policy. A boutique architecture firm may own zero vehicles yet routinely send interns to job sites in personal cars. The owner might think “no vehicles, no auto exposure,” but the liability exists all the same.2. Companies with a fleet policy but occasional outside use. Even firms with ten branded vans can face a gap if employees rent SUVs at the airport or use personal cars on weekend errands. Unless the commercial auto policy has an endorsement extending to hired and non-owned autos, the exposure persists.

High-Risk Industries



Delivery services, food caterers, construction subcontractors, home health agencies, real estate brokerages, and nonprofits that rely on volunteers are especially vulnerable. Any organization that reimburses mileage or provides a car allowance should assume that courts will construe those benefits as employer endorsement of driving for work, strengthening the plaintiff’s case.

Most insurers offer HNOA coverage through endorsement CA 99 47 (Business Auto Coverage Form) or a standalone policy. Core elements include:

• Bodily Injury and Property Damage Liability: The primary grant of coverage, usually written as a combined single limit (CSL) starting at $500,000 and commonly settling at $1 million or $2 million.• Defense Outside the Limits: Legal costs paid in addition to the liability limit. This feature is critical in Washington, where average defense expenses in auto litigation exceed $50,000.• Worldwide Rental Coverage: Extends protection to vehicles hired overseas, subject to local admitted insurance laws.• Employees as Insureds: Includes officers, directors, and sometimes volunteers while using non-owned autos for business.

No policy is bulletproof. Typical carve-outs include:

• Damage to the hired vehicle itself (physical damage coverage must be purchased separately).• Autos owned by partners or members of an LLC (some endorsements can buy back coverage).• Livery or passenger-for-hire operations unless specifically endorsed.• Long-term leases surpassing six months, which insurers may treat as “owned” exposures.• Intentional acts, racing, or criminal activity.

Choosing a limit often balances cost, contract requirements, and worst-case scenarios. Many Washington businesses default to $1 million CSL because that tier satisfies most landlord and client contracts. However, the upward trend in jury awards—what actuaries call social inflation—demands a closer look. In 2023, the median auto liability verdict in King County Superior Court reached $1.4 million, while several catastrophic cases topped $10 million.

Risk professionals increasingly layer an excess or umbrella policy on top of the underlying HNOA endorsement. Premiums for the first $1 million excess layer can run as low as $600 annually for low-mileage exposures, a modest outlay compared with uncovered litigation.

Loss Modeling Techniques

Some insurers and brokers use telematics data or mileage logs to model potential severity. A common rule of thumb multiplies average miles driven per employee by frequency factors published by ISO (Insurance Services Office). Even rudimentary modeling often reveals that a $2 million limit barely covers a severe multi-vehicle collision involving multiple injured parties.

Several variables drive the price of HNOA coverage in Washington:

• Annual revenue: Higher gross receipts imply more vehicles in motion.• Number of drivers and employees.• Radius of operations and typical mileage.• Claims history and motor vehicle records (MVRs).• Industry class and contractual limits.

Current Market Snapshot

After a sharp hardening in 2021–2022—when average HNOA premiums jumped 12% statewide—the market began to stabilize in late 2023. Strong competition among national carriers and regional mutual insurers has kept 2024 renewal increases in the 4%–6% range for accounts with clean loss histories. Still, sectors with frequent delivery exposure continue to face double-digit hikes because of nuclear verdict concerns.

When a collision occurs, prompt notice is critical. Most HNOA policies require that the insured report the incident “as soon as practicable,” a phrase Washington courts interpret strictly. Failure to notify can jeopardize coverage, particularly if late reporting hampers the insurer’s investigation.

Case Study: Restaurant Errand Gone Wrong

A Seattle bistro asked a line cook to pick up fresh seafood from the wholesaler using the cook’s 12-year-old sedan. On the return trip, the sedan hydroplaned on Interstate 5, striking two vehicles and injuring five occupants. The employer’s general liability policy declined the claim, citing the auto exclusion. The cook’s personal policy carried Washington’s state minimum of $25,000 per person, $50,000 per accident—far below the $430,000 in combined medical bills. Fortunately, the restaurant had a $1 million HNOA endorsement, which handled defense and ultimately settled for $510,000. Without the coverage, the small business would likely have declared bankruptcy.

Insurance is only one layer of protection. Firms can shrink exposure and premiums through proactive measures:

• Adopt a written driver safety policy that requires proof of insurance and annual MVR checks.• Reimburse rideshare fares for late-night work instead of encouraging fatigued employees to drive.• Use corporate accounts with rental agencies, ensuring that contractually required insurance is automatically included.• Invest in driver safety apps that monitor speeding and harsh braking in employee-owned vehicles.

Safety Culture as a Premium Lever



Insurers increasingly reward documented safety programs with credits of 5%–15%. In one Washington tech startup, adopting a cell-phone-ban policy and requiring an online defensive driving course saved $1,800 on an annual HNOA premium of $12,000—plus the incalculable benefit of fewer accidents.

Most Washington businesses secure HNOA protection through a commercial lines broker. The broker will typically place coverage with carriers active in the state, such as those filed under NAIC group codes 012, 031, or 111. Key steps include:

1. Complete an exposure questionnaire covering mileage, vehicle types, and driver counts.2. Provide loss runs for at least five years.3. Submit copies of contracts that compel higher limits, ensuring the quote meets every requirement.4. Review policy forms, noting any Washington-specific endorsements that modify notice provisions or define punitive damages treatment.

Endorsement Checklist



Before binding coverage, confirm that the policy:

• Names employees, volunteers, and temporary workers as insureds.• Provides primary (not excess) coverage when required by contract.• Includes fellow employee coverage, important when co-workers sue each other.• Extends worldwide if international travel is on the docket.

Does personal auto insurance ever suffice?Rarely. Personal auto carriers often exclude business use beyond occasional errands. Claims adjusters may deny coverage once they learn the trip was work-related.

Is physical damage to a rental car covered?Only if the policy includes hired auto physical damage coverage or the business purchases the rental agency’s collision damage waiver.

How long can a vehicle be leased before it’s considered owned?Many insurers treat leases over six months as owned, but the threshold can be 12 months in some policy forms. Review the definition of “leased auto.”

Do nonprofits have different requirements?No. Liability principles apply equally. However, insurers sometimes offer discounted programs recognizing the public benefit nature of nonprofits.