Vehicle rental company insurance is an important investment for a rental car business since it protects the financial assets of the business owner.
This article will go through the primary insurance coverage for a vehicle rental company, as well as general liability insurance and additional policies that are appropriate for this industry.
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Car Rental Companies Need General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
Situations That A Car Rental Company’s General Liability Insurance May Cover
Example 1: One of your clients falls on ice in the parking lot while walking to their leased car. The event results in a number of injuries, some of which require medical treatment. The expense of therapy for the injuries would most likely be covered by general liability insurance.
Example 2: Your firm’s management compares your company to another rental vehicle company on social media. The comparison is factually incorrect and unfair to your rivals. In response, they bring a libel claim, which is covered by general liability insurance.
Example 3: Your automobile rental firm places an ad in the local newspaper with pricing it does not really provide. Customers sue your firm in a class action false advertising case, and the legal expenses and settlement are exorbitant. The case would most likely be covered by general liability insurance.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
For $1 million in general liability coverage, the typical automobile rental firm in America costs between $450 and $1,000 per year.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Insurance Required by Car Rental Companies
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all automobile rental firms should have are as follows:
Insurance for Commercial Property
If your rental vehicle firm owns its office space and/or parking lot, commercial property insurance should be purchased to cover those assets. This insurance protects buildings, other structures, and specific equipment (usually not including rental cars).
A business owner’s policy may be used to get commercial property insurance (BOP).
Insurance for Commercial Vehicles
Commercial auto insurance covers commercial vehicles such as rental automobiles. This coverage is required for every vehicle owned and rented by your rental car business
Rental automobiles have excellent resale values since they are relatively new and have little mileage. Check that the limits of your company’s rental vehicle insurance match or exceed the fair-market value of the business fleet.
Commercial vehicle insurance is usually offered as part of a package policy.
Insurance for Workers’ Compensation
Because they employ people, most automobile rental firms need workers’ compensation insurance. Most states require firms with employees to have workers’ compensation insurance. The insurance provides protection against workplace injuries and diseases.
Types of Insurance That Some Car Rental Companies May Require
In addition to the insurance listed above, your automobile rental firm may need other forms of coverage based on particular elements of your operations. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Umbrella Insurance for Businesses
If you want to safeguard your vehicle rental firm with greater liability coverage, you might consider purchasing commercial umbrella insurance. This insurance offers an additional layer of liability protection, and limits are often set in the millions of dollars.
A BOP is often used to get commercial umbrella insurance.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.