What is non-owned auto coverage?

Complete Guide to Non-Owned Auto Coverage

Why This Question Matters for Colorado and Utah Residents

Non-owned auto coverage is often overlooked until a serious claim occurs. For businesses and nonprofits in Colorado and Utah, where employees regularly use their own vehicles for work-related tasks—whether delivering meals in downtown Fort Collins or transporting tools to a Salt Lake City job site—this coverage can mean the difference between a minor inconvenience and a financially devastating lawsuit.

• Local driving risks are high: Colorado and Utah both face above-average accident rates and high weather-related claims, particularly from hail (Northern Colorado sees repair costs averaging $4,200 per vehicle after a storm).
• Coverage gaps can ruin a business: Personal auto insurance nearly always excludes accidents during business activity, leaving employers exposed to lawsuits.
• Legal obligations and contracts: Many Colorado and Utah contracts (from government grants to delivery app partnerships) now require proof of non-owned auto coverage.

What Most People Get Wrong

Many owners assume their commercial auto policy or their employees' personal auto policies will cover all work-related driving. In reality, personal policies in both states typically exclude business use (unless specifically endorsed), and basic commercial auto does NOT automatically extend to non-owned vehicles. This creates a costly gap, especially in industries with frequent off-site work.

Another common mistake is underestimating lawsuit risks—even a minor fender-bender involving an employee on the clock can lead to claims well over $100,000, especially if injuries occur.

The Complete Picture

Non-owned auto coverage is a specific endorsement or policy that provides liability protection when employees use vehicles the business does NOT own, such as their personal cars or rented vehicles. It pays for legal defense and (if needed) settlements or judgments if your business is sued after an at-fault accident during business activity (think: deliveries, errands, home health visits, or site inspections). In Colorado and Utah, this is especially crucial due to higher regional claim frequencies and stricter contract requirements. For example, Northern Colorado nonprofits and food delivery businesses often face city or state mandates to carry this coverage as a prerequisite for operating grants or contracts.

Premiums are generally affordable, averaging $350–$750 per year for small operations, and the coverage delivers essential protection against potentially catastrophic financial losses. Adding non-owned auto coverage ensures your business is shielded—not just from property damage claims, but from the far greater risk of personal injury lawsuits, which can reach hundreds of thousands of dollars even for moderate accidents in local courts.

Making the Right Decision for Colorado and Utah Residents

Question 1: Do any employees ever use personal vehicles for business purposes?

Consider the reality of your operations:

• Do you send team members to the bank, post office, job sites, client meetings, or for local deliveries using their own cars?
• Does your nonprofit rely on volunteers using personal cars (for example, delivering meals in Fort Collins or running errands in Ogden)?

If yes, you're exposed—regardless of how rarely it happens.

Question 2: What is your potential liability exposure if an employee causes an accident?

Think through realistic scenarios:

• A single at-fault injury accident in Denver or Salt Lake City could result in judgements exceeding $250,000, which a personal auto policy won’t cover for business use.
• Could your business withstand paying these costs out of pocket?

Question 3: Are there contractual, grant, or regulatory requirements to carry non-owned auto coverage?

Review any contracts, grants, or state regulations applicable to your operations. Many public and private entities require this coverage to reduce their own risk before awarding contracts or funding (especially common for health, nonprofit, construction, and food delivery businesses in both Colorado and Utah).