Non-Owned Auto Policy

What is non-owned auto insurance coverage in Ontario?

The non-owned auto policy mitigates the risk exposures associated with employees,  staff or volunteers using their vehicles for work-related purposes.  It also provides an extra level of protection if you drive a car that you don’t own. 

The risk exposure stems from the doctrine of vicarious liability, which imposes liability on an employer for the conduct of an employee, agent or volunteer.  

The primary function of a non-owned auto liability policy is to protect an employer when, on behalf of the employer, employees operate vehicles not owned by the employer.

The non-owned car insurance policy also extends the same level of coverage as a named insured, to the driver. Typically, the named insured or policyholders receive the most comprehensive coverage compared to an insured. The non-owned policy addresses this gap by providing the same level of coverage as a named insured, although not the owner of the vehicle. The owner’s policy provides the most comprehensive level of coverage to the named insured, or policyholder. 

Types of Non-Owned Automobile Exposures

• Vehicles for hire
• Vehicles operated under contract
• Employees using their car in the business of the employer 
• Renting or leasing vehicles regularly 

Example 1:  you send an employee on a work-related task using their vehicle

Example 2: your employees deliver pizzas with their vehicles

Example 3: you operate a non-for-profit event and use volunteers to run errands with their vehicles

Example 4: you do not own a vehicle but rent and lease vehicles regularly

Example 5: your business relies on using a rented or leased fleet of vehicles to carry out business operations. 

How much does a non-owned auto insurance policy cost in Ontario?

The cost of a non-owned auto insurance policy in Ontario varies based on many factors. Every business presents a unique set of risk exposures where a cookie-cutter approach to premium pricing simply does not work. 

Sections of a Non-Owned Automobile Insurance Policy

Ontario’s non-owned auto liability policy is abbreviated SEF 6, like in all other Canadian jurisdictions. 

1. Policy declarations – parties to the contract, effective date and expiry of the policy, the premium and rate, the amount insured
2. Insuring agreement – the subject matter of insurance (what is being covered), the perils insured against and the terms of payment 
3. Exclusions – risks not covered under the policy
4. Additional agreements – the supplementary agreement apart from the original agreement
5. General provisions and definitions –  states the rights and duties of both the insured and insurer
6. Endorsements – insurance floaters designed to either add, restrict or remove coverage from the primary owner’s policy 

How does a non-owned auto policy work in Ontario?

A non-owned automobile policy SEF (6) is designed to respond to claims above the owner’s primary auto liability policy.  The non-owned policy applies only to the named insureds if they are named in the lawsuit, and only pays out if the named insured/s are found liable. 

The non-owned car insurance policy also benefits drivers who regularly use non-owned vehicles.  The non-owned policy provides the same coverage as if they were the named insured. 

Who needs a non-owned car insurance policy in Ontario?

1. Businesses that use now-owned vehicles regularly.  
2. Individuals who rent, lease or borrow vehicles regularly

Conclusion

Non-owned automobile coverage helps mitigate loss exposure for businesses and individuals who use vehicles not owned by them for business or work-related purposes. 

The non-owned auto policy provides an additional layer of protection in situations where additional coverage is restricted to the policyholder and the vehicle owner.  Coverage extends benefits to the driver and business owner in the same capacity as a named insured under the primary auto policy. 

Employees using their vehicles for work-related purposes, volunteering for organizations, or simply renting vehicles regularly, are the main exposures addressed by non-owned auto coverage. Purchasing non-owned auto coverage will enhance risk management strategies and safeguard against any loss exposures not included in your primary auto coverage.