Commercial & General Liability ( CGL ) policy provides coverage for Non-Owned and Hired Automotive Liability referred to as NOHAL. Let us understand the paradigm under which NOHAL works –
A company could have taken necessary steps to ensure that its own fleet operation is properly covered in the event of an accident but a potential loss may arise from employees who operate their own personal vehicles for company business. Below are a few instances where the company can be held accountable for the actions of its employees while they are driving their own vehicles.
- The administrative employee uses his/her own vehicles to go to the post office or bank on the company’s behalf
- Employee goes to pick up a visiting client at the airport
- Rented a vehicle while on a business trip
- Salesforce provided a car allowance for business use of their personal vehicles
If an employee meets with an accident under any of these situations, the company can be held accountable and may be sued for damages. Typically, an employee’s personal automobile insurance will provide primary insurance to both the employee and the company if the employee is using his or her own vehicle on the company business. However, there is the chance that charges will exceed the employee’s policy limit and would then be passed on to the company. Without non-owned and hired automobile liability coverage the company may be vulnerable to a costly exposure.
Non-owned and hired automobile liability insurance covers bodily injury and property damage caused by a vehicle the insured hires (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees). The Non-owned and hired automotive liability coverage can be added to the general liability CGL policy. It protects the company if it is found legally liable as a result of an automobile accident that the employee has in a hired or non-owned vehicle while on company business.