California Property & Casualty Broker-AgentCasualty InsuranceMedium
A California business client is purchasing a Commercial Auto Policy. They frequently rent vehicles for short-term projects when their own fleet is insufficient. Which of the following coverages would be most important to add to their policy to address liability arising from these rented vehicles?
- AHired Auto Coverage
- BGaragekeepers Coverage
- CDrive Other Car Coverage
- DNon-Owned Auto Coverage
Show answer & explanationAnswer & explanation
Correct answer: A. Hired Auto Coverage
Hired Auto Coverage provides liability protection for the business when it leases, hires, rents, or borrows vehicles for business use. This directly addresses the scenario where the business frequently rents vehicles for short-term projects, ensuring they have coverage for accidents involving these temporary vehicles.
Why the other options are wrong
- B. Garagekeepers Coverage is for businesses that store or repair customers' vehicles, not for rented vehicles used by the insured.
- C. Drive Other Car Coverage is typically for individuals (e.g., executives) who don't own a personal car but drive company vehicles and occasionally borrow other cars.
- D. Non-Owned Auto Coverage applies when an employee uses their personal vehicle for business, not when the business rents a vehicle.
Hired Auto Coverage
Commercial Auto coverage that provides liability protection for a business when it leases, hires, rents, or borrows vehicles for its business operations.
- Applies to vehicles not owned by the business, but temporarily used.
- Essential for businesses that supplement their fleet with rentals or leases.
- Distinguished from Non-Owned Auto, which covers employee-owned vehicles.
Memory trick: Hired Auto: When you 'hire' a car, your policy is the fire!