Many people use their own private car insurance to cover a rental car. However, private car insurance will not cover business use of a vehicle, and it will not cover business use of a rental car, either. Commercial rental car insurance must be bought to ensure that rental car insurance is provided while the vehicle is in use for business applications.
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There are many commercial applications for a rental car. Your company may need to rent a vehicle for travel associated with business. You company may also need to rent a van or truck to move, transport, or deliver large items, inventory, or supplies. Or your company may need to rent equipment that needs to be covered under commercial rental insurance.
Private Insurance Won’t Cover Your Business
According to the industry specialists at the Insurance Information Institute, private car insurance will not cover business uses of a rental car. If your business has commercial car insurance, you can check with that insurance provider to find out if it will extend to cover rental vehicles or equipment
Because the liability for damages is with the business and not the owner, personal insurance won’t cover it. There is a split between all personal and commercial insurances, so you need to have insurance to cover both options.
The liability of a business is much more complicated than the liability of an individual. Employees may have access to vehicles–businesses have many vehicles and some of those vehicles might be carrying potentially dangerous materials that require special permits and commercial driver’s licenses. Due to this difference in liability, commercial and private auto insurance coverage is separated.
Necessary Coverage
You are required to purchase your state’s minimum amounts of liability insurance when you rent a car, though you may want to opt for more. This coverage is called liability insurance. It is used to pay for injuries and damages caused to others in an accident with the rental vehicle.
The next required coverage is called a loss damage waiver, and you are really just paying to waive your liability, or financial responsibility, if the rental car is stolen or you damage the rental vehicle in any way. Then, the rental agency’s insurance takes over and pays for the damages. Make sure that the loss damage waiver you purchase also covers additional costs such as towing and loss of use.
Optional Coverage
The necessary coverage packages take care of your liability and damages to the rental car, but that still leaves the driver and any passengers without injury coverage.
One optional coverage package is personal accident insurance. This coverage pays for medical injuries sustained by the driver and passengers. It is important to keep in mind just how expensive medical care after an accident can be, so make sure you purchase enough protection.
Personal accident insurance is an important part of commercial rental insurance. If it was personal rental car insurance, then the driver’s insurance or health insurance would cover the costs of injuries. However, because the driver and passengers are on business, it is likely that any injuries will be covered by workers’ compensation insurance.
Personal accident insurance will allow your business to forgo the use of its workers’ compensation insurance, possibly saving you from higher premiums.
One last rental car insurance option is also important. Personal effects coverage pays if items are stolen from the vehicle. This can be of major importance if you have expensive equipment, tools, or data in the vehicle. Generally, such equipment and information will be of great importance to your business, so it is important that you protect it from theft as much as possible.
You don’t want your business to have to bear the full cost of replacing important equipment or tools, or bearing liability costs for losing confidential data.
Check with Your Commercial Car Insurance Provider
Before you commit to any commercial rental car insurance, you should first check with your commercial auto coverage company to find out if any of your commercial car insurance will cover the use of a rental vehicle.
You may find that your commercial car insurer might cover liability but not collision or medical. Each company will have its own policy on how far your coverage extends.
You may be able to purchase a rider policy that will cover the use of a rental car for a short duration, or they may offer you an umbrella policy to cover your company’s liability.
However, many businesses don’t have commercial car insurance, either from lack of knowledge or lack of need. If your business doesn’t already have a commercial auto insurance provider, then you can also check with your business insurance provider. They, too, may be able to offer a rider or umbrella policy.
If you don’t have either commercial auto or business insurance, then you will have to purchase coverage for your rental car use elsewhere. Even if you get an umbrella policy, you will still need to buy collision and comprehensive coverage in the form of a loss damage waiver.
Check with Your Credit Card Provider
Another option that you may also have is to check with your business credit card provider. They may be able to offer you some sort of coverage for a commercial rental car, as such options are usually already a part of your credit card service.
They will generally cover the loss damage waiver, but you are cautioned to check the fine print. According to the travel website TravelSense, some credit card insurance is only supplemental to a primary insurance. It won’t help you if that is the only coverage you have!
A quick call to your credit card company should let you know if your business can use the rental car insurance option, and exactly what it covers.
Remember, you must purchase the rental with the credit card that will be providing protection. If your credit card company doesn’t offer enough protection, then buying coverage is your best bet.
Online Commercial Rental Car Insurance
There are many online companies that provide rental car insurance. You can get a quote for coverage, just like for private car insurance coverage.
You want to make sure that the online company you plan to buy insurance from is legitimate. You can look up their license utilizing the National Association of Insurance Commissioner’s Consumer Information Source (CIS).
Since online companies may not have offices in your state, the easiest way to research them is with the Consumer Information Source. You can search by the company’s name or company code. If you can’t find the company by searching its name or the company won’t give you a code, you can be safe in assuming that it is a scam. You can even report the suspected fraud on the very same website so that no one else is a victim of a fraudulent insurance company!
Not all online rental car insurance companies are fraudulent. You can generally find enough coverage for less than you would pay with the rental agency.
At the Counter
Buying insurance from the rental car agency’s provider is always an option, and it is a quick and easy option if you are pressed for time. Obviously, the rental car insurance provider used by the rental agency won’t be fraudulent.
The rental insurance from the rental car agency probably will be more expensive than any other option, however. Yet you will also know that you are completely covered, and you don’t have to worry about deductibles, rate increases, or reimbursement if you go with another form of coverage.
If you can, buy the insurance on the rental agency’s website before you go to pick up your rental. You will save time and even possibly money if you get the insurance before arriving at the counter. Then, the process of picking up your rental car will go as smoothly as such deals can.
Compare Prices
If you have enough time, your best bet is to get quotes from multiple sources to compare. You might find that an online rental car insurance provider is the most cost effective, or you might find that the rental agency’s preferred provider actually has the best rates. Make sure that you are getting quotes for the same amount of coverage, so that you can really compare each company’s offer for coverage side by side.
You also may want to buy protection apart from your business’s insurance coverage in order to avoid having to file a claim with your company’s insurance. In this way, you might avoid deductibles or rate increases that can accompany a claim, according to CBS Money Watch.
Once you have reviewed all of your options and compared all of your available rates, you are ready to rent a vehicle for commercial use, knowing that you, your business, and your employees are protected as much as possible!
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