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Tuesday Morning Insurance Tidbit - HNOA

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Good Morning fellow ADI citizens!!!!

                In today's installment of the Tuesday Morning Insurance Tidbit being delivered fresh to you from my secrete command center in Sheridanopolis, I am going to address a very common question that comes up when I, InsuranceMan 2.0, go through proposals and coverages with my clients.  What is this, “hot topic, this highly questioned coverage!??!!”, you may ask.  Fret not fine citizen, I am here to guide you through the dark and treacherous land of insurance coverage.

                The topic we are discussing today is …  Da – Da – DAAAAA!!!!!!  Hired and Non-Owned Auto.  It may be a term you have heard, although, it very well may not be as most policies I see for distilleries do not include this invaluable coverage.  What is Hired and Non-Owned Auto (from this point forth we will refer to it as “HNOA”.  Feel free to throw that term around and look “insurance-telligent” in front of your peers and agent 😉) ?  I am glad you asked!

                HNOA is an auto policy that fills some major auto liability gaps and helps to protects your distillery business/entity in the case of an auto accident.  Did you know that if you or an employee are driving a rented vehicle or your own personal vehicle for business being done on behalf of the distillery/entity, and you were to be involved in an accident, your personal auto policy would more than likely deny any coverage for the actual business/entity??????  You didn’t think about this did you?  Why would you, you trust the “insurance professionals” to come up with these thoughts for you, that is why they are being paid, right?!?!  Well, if you don’t have this coverage or have not heard of this coverage, why are you paying them, they didn’t come up with this?!?!?!  This is why you should be with me, InsuranceMan 2.0!!!!!!!!!!!!!!!!  I am here to protect and serve the fine citizens of this land!

                OK, at this point let us take this coverage and break it down.  This coverage consists of two parts, the Hired, and the Non-Owned.  Let’s start with and define Hired.  Hire is defined as … “to engage the temporary use of at a set price; rent”, according to dictionary.com.  In plain English please!  It means a rental vehicle.  Something you are paying a fee for to use on a temporary basis.  Hired Auto Liability coverage can essentially take the place of liability insurance needed in order to rent a vehicle from a rental car company.  A bit more on this later though.  Hired Auto coverage protects your business/entity for any liability arising out of an accident to may occur while using a hired/rented vehicle.  IT DOES NOT PROVIDE PERSONAL COVERAGE FOR THE DRIVER!!!!!!!!  NOR DOES IT PROVIDE COMPREHENSIVE OR COLLISION DAMAGE COVERAGE!!!!!  Please note these items, it is very important.  For the sake of this topic however, all we are concerned about at this point is protecting the business from automotive liability damages. 

                Although your personal auto policy may cover you for your personal liability in a rental vehicle, most personal insurance policies exclude the coverage of “business use” and will not provide any liability coverage on behalf of the business/entity.  Due to this exclusion, as you can see, this portion of the coverage is quite valuable and is somewhat of a “must-have”.  “But I don’t rent vehicles for my business.”, you may be saying.  Understood and fine point my dear citizen.  I hear you loud and clear, however …  You never know when you may need to lease or rent a vehicle.  Maybe you flew into another town to have a business meeting and need to rent a vehicle, or maybe you need a van or box truck to run a delivery.  You do not want to try to procure this coverage at the moment it is needed, and quite honestly, HNOA is a generally a bundled product.  These coverages are often done in concert with one another and there is no savings to only go with one or the other.

                If I may, please allow me a quick aside as well to this topic.  If and when you do lease or rent a vehicle, always check with the rental agency to see what the associated cost is to purchase insurance coverage directly from the rental agency.  Generally, the rental agency insurance will not cover you for your own personal liability or any business liability (and keep in mind your personal auto policy will excluded the business auto liability.  See how this is all an intertwined web of confusion, and why you really need the “Hired” part, and why you really need me, InsuranceMan 2.0!!!!!!!!!!).  What it will cover and provide for in many cases is “walk away” coverage for damages.  Remember earlier when I said, “… please note these items ….”???!?!?!?!  Remember what I asked you to note????  If not, scroll back up and take a look, I will wait ………………….

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                Ah, I see you are back.  Did you find the answer?!?!!??!  That’s right!!!!!!!!!!!  Comprehensive and Collision damages are excluded under the Hired portion of the coverage.  The Hired portion is only dealing with liability, no physical damage to the rented vehicle.  Often times you can purchase the physical damage coverage directly from the rental car agency, and trust me friends, it is money well spent.  There is a way to add on physical damage for hired vehicles to your own insurance policy, but for how often you may use it, and what it covers, it is generally not worth it.  You are usually money ahead to purchase this coverage from the rental agency.  “Well, I rent all my vehicles with my business/personal credit card and they provide coverage for damages, so why would I spend more money?!?!?!?!”  Excellent point vigilant citizen!  Unfortunately, it is a common misconception that renting a vehicle with a credit card provides all the coverage you will need.  Whether you place Hired Physical Damage on your own insurance policy, or rent with a credit card, both have some very important exclusions that rental agencies may exploit.  Rental agencies have things like “layup costs”; “diminution of value”, “loss of rent”; and various other charges that neither a credit card or a policy will cover.  With that said, the coverage that you can purchase directly from the rental agency will often time cover those extra expenses.  I will say it again … trust me, this is money well spent.  A quick story … I rented a vehicle with a business credit card and was caught driving it near a tornado.  Sand blasted the paint, pitted the windshield, and blew out a window.  Although the credit card company covered the cost of the repair to the paint, windshield, and window it did not cover these “other costs”.  Ultimately, it cost around $3,500 extra (as in out of pocket) to cover the layup of the vehicle, the diminution of value, and the loss of rent.  If I had purchased the coverage from the rental agency, it would have not cost me anything more than the cost of their insurance.  Lesson learned!

                Alright, do you need a bit of a break?  No?!?!?!  Then onward and upward into Non-Owned Auto Liability Coverage.  You or your employee are running out to a big box store for some parts you need, or you are running to a local liquor store or venue to do a tasting.  On your way to or from, there is an auto incident!  The local law enforcement agency shows up and start asking questions.  You or your employee say that you were out running around on behalf of the distillery (this happens, oh does this happen, more times than I care to say) at the time of the accident.  The other party that you crashed into hears this and thinks, “OH!  A distillery, those guys are made of money!!!!!” (As we all know this may simply not be the case, but they think it anyway since they think there is endless money in making alcohol.)  Now, not only does the injured party sue you personally (personal auto coverage), but they sue the distillery as well thinking there are deep pockets there.  Well, since the distillery does not “own” the vehicle (the name of the distillery is not on the title), if you do not have Non-Owned Auto Liability coverage, there would be no protection against a lawsuit.  NO BUENO!!!!!!  This coverage is crucial to have.  I will tell you that in my 16 years as the vigilant protector of the fine citizens of "insuranceland", this is the number one claim that I have seen.  Think about it.  How many times does your product cause damage to someone?  How often does someone come into your facility and trip over a box, or slip and get hurt?  How often do you have a fire?  Not very often at all, thank goodness!  How many times are there auto accidents though????  ALL THE DANG TIME!!!!!!!  In fact, studies have shown that the average driver, over the course of their lifetime will be involved in at least 3 to 4 accidents. That is why having this coverage is as important as covering your equipment, your general liability, your products, and your stock, if not more so!

                At the end of the day, when I sit down (still donning my InsuranceMan 2.0 super-suit, since insurance injustice never takes a rest, and I must stay frosty and vigilant) in my command center with a nice lowball of my favorite spirit-du-jour, I can rest somewhat easier knowing that the fine citizens that I watch over are protected to the best of my ability, as they drive to and fro conducting business in their Hired or Non-Owned vehicles. 

                As always, if you have questions about these coverages, or if you are wanting to know about the nuances of insuring vehicles that are titled in the name of the distillery/entity, by all means, turn on the InsuranceMan 2.0 beacon and I will gladly come to your rescue.  Send me a PM, call, or text me at 307-752-5961 and I will speed to your assistance.

Until next time my friends,

Stay Vigilant,

Aaron Linden

a.k.a. InsuranceMan 2.0

307-752-5961

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My brain hurts! 😁 Thanks for the detailed update Aaron! 

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