Author: Austin Lyon


Allowing employees and volunteers to drive their personal vehicles or rent/lease vehicles for use on behalf of your mission comes with great risk exposure. Any incident that occurs behind the wheel while performing company-related work does indeed fall back on the organization. Implementing a comprehensive Hired Non-Owned Auto (HNOA) policy is an essential step for your organization to protect itself from liabilities while employees are operating personal or leased vehicles that the organization doesn't own.

What to require from drivers

Your HNOA policy should require that drivers do the following:

  • Provide their vehicle's make, model and year, and a photocopy of their valid driver's license.
  • Provide the Insurance Declaration page as proof of insurance, so the organization can determine that the driver has adequate auto liability limits. Minimum limits are $100,000 bodily injury for a single person, $300,000 total bodily injury per accident and $100,000 for property damage
  • Name the organization as an additional insured on their Auto Liability policy.
  • Have no commercial use exclusion on the policy.
  • Notify the organization immediately if no they're no longer insured or no longer have a valid driver's license.
  • Keep vehicle registration and required inspections current.
  • Obey all laws related to driving while intoxicated or under the influence of drugs. Violation may result in termination of the driver's employment.
  • Obey all traffic laws and motor vehicles ordinances and regulations. The driver is responsible for any fines, parking tickets or other assessments for violations of traffic laws, ordinances or regulations.
  • Obey seatbelt laws and require all passengers to do so as well. Violation will result in disciplinary action or termination.
  • Understand that the organization isn't responsible for vehicle damage or property loss resulting from a break-in.
  • Indemnify the organization against all claims, losses, damages and expenses, including legal fees, which the organization may incur as the result the using the vehicle on behalf of the organization.
  • Get the organization's consent before using a ride-share service such as Uber and Lyft.
  • Don't allow the driver to use a ride-share service such as Uber or Lyft without the consent of company management.
  • Have the driver sign a motor vehicle report (MVR) disclosure and release form.

Types of violations

Violations fall into one of four types:

Type A includes, but isn't limited to DWI, DUI, OUI, refusing a substance test and charges of reckless driving, manslaughter, hit and run, eluding police, any felony, drag racing, and having or driving with a suspended license.

Type B includes all vehicle accidents, regardless of fault.

Type C includes all moving violations not in Types A or B, such as speeding, improper lane change, failure to yield, and running stop lights or signs.

Type D includes non-moving violations such as illegal parking, equipment violations, obstructing traffic, and failure to display registration or driver's license.

Progressive consequences

In addition to being responsible for all traffic fines and court costs, the driver faces the following consequences.

First offense for a Type A violation: Driving privileges are suspended or revoked

First offense for a Type B violation:

  • Not at fault — verbal warning (not part of permanent file) and defensive driving training
  • At fault — written warning (can be removed after three years without a driving offense) and defensive driving training

Second offense for a Type B violation: Driving privileges are suspended or revoked

First offense for a Type C violation: Verbal warning (not part of permanent file) and defensive driving training

Second offense for a Type C violation: Written warning (can be removed after three years without a driving offense) and defensive driving training

Third offense for a Type C violation: Driving privileges are suspended or revoked

Any Type D violation: Verbal warning (not part of permanent file)

Track driving performance

Unlicensed drivers and drivers with poor driving records increase your organization's liability. It's paramount that organizations have procedures in place to ensure that all drivers have a valid driver's license and an acceptable driving record by setting clear expectations with a motor vehicle report (MVR) policy outlining expectations, standards and what actions will be taken for violations.

Track drivers' moving violations, preventable accidents, major/serious violations (like driving recklessly, while impaired or with a suspended/revoked license) and vet drivers to determine if they can drive for your organization. Performed and document reviews upon hire and then annually.

Provide training

Lastly, all drivers should receive driver training that's documented at onboarding and at least annually thereafter on topics such as distracted driving, speeding, intersections, space management and speed.

As a part of a partnership with Gallagher, your organization receives complimentary access to Gallagher's Safety Training Education Platform (STEP), which offers a variety of safety training, safety talks, webinars, monthly bulletins and educational materials.

If your organization has employees or volunteers who operate their own vehicles or rent/lease on behalf of your organization, check with your broker to ensure that adequate HNOA coverage is included in your auto policy with your insurance carrier.

Nonprofit Team Leader


The information contained herein is offered as insurance Industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client-specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have in place or that may be generally available. General insurance descriptions contained herein do not include complete Insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis. Insurance brokerage and related services provided by Arthur J. Gallagher Risk Management Services, LLC. (License Nos. 100292093 and/or 0D69293).