Every business needs a range of insurance coverage to provide the right types of protection. This ensures that you are protected from lawsuits, accidents, disasters, or any other event that would otherwise cause financial disaster.
However, there are some instances when your business takes on more than the average risk. If you operate a niche car rental business, you land firmly in this category. To keep your business and your assets safe, you have to navigate an insurance process that may seem a bit complex.
If you’re searching for a commercial insurance policy to cover your car rental business, it’s a sure bet that you have plenty of questions. Primarily, what kind of policy will provide the coverage you need, and how do you find it?
We can help with that! Think of this as your guide to fleet and other marketplace car rentals. We’ll cover the types of insurance you need, sourcing the ideal policies, and what to expect in terms of cost. At the end, you should have all the info you need to close on a policy that provides the protection your business needs.
Where to Get Commercial Car Insurance?
It’s time to search for a provider. When it comes to general liability or commercial property insurance, you can rely on any commercial insurance company. Just be sure they are within your budget and offer great customer service.
Covering your vehicle or fleet of vehicles is a bit different. Not all insurance companies will provide this coverage. Out of those that do, you may struggle to find one that really works with companies in your niche.
Your best bet is to find a company that already works with car rental companies and can provide a comprehensive garage insurance policy. They will be most familiar with your needs. You’ll also be likely to have an insurance solution bundled that includes the coverage that applies to you.
We Recommend Period X Fleet Insurance, The New Garage Policy
Period X is a unique insurance product created to meet the needs of anyone who is renting a single vehicle or fleet on a ride-share platform and needs a garage policy to cover minimum coverages. Not only do they offer the insurance owners need when their vehicles are not actively in service, they do so at reasonable rates. Further, Period X fleet insurance comes with perks such as an in-car device for each vehicle, and a web-based app to track every vehicle. This coverage, once implemented, ensures that no rental vehicle is ever in a period without coverage as long as the platform you are renting on provides insurance to the renter. Period X specifically covers the period of time for the vehicle/fleet owner when it is not rented through a platform.
What Type of Insurance Do I Need?
Any business owner who has cars knows they have to manage the following:
Maintaining Adequate Physical Space
That’s quite a bit to handle. However, if your business is renting cars, you have even more to think about.
Start by taking a look at your inventory. How many cars do you own? What are their years, makes, and models? What’s their value? Is your inventory standard cars, or other vehicles?
Get the answers to these questions before you start searching for car rental business insurance. This is the information that will drive the type of coverage you need, your expected cost, and the insurance providers you consider.
Of course, none of these things will have more influence than the specific type of car rental you’re offering. These categories are general car rental business insurance, and commercial fleet insurance.
General Car Rental Business Insurance
Before you think about insurance to protect your vehicles for hire, you’ll want to consider protecting your business as a whole. There are several categories of coverage you may need. Your specific requirements will depend on the overall purpose of your business. This includes whether you are renting out individual vehicles to rideshare drivers or fleets. In any case, you’ll want to consider the following:
Commercial Property Insurance
Will you need commercial property coverage? That depends. This coverage will not protect your vehicles from damage or loss. However, it does provide protection in case your property or other belongings are damaged.
You may wonder if you need this coverage if you simply rent your vehicles out from your own home. Won’t your homeowners coverage take care of that? Perhaps not. If the damage is in any way related to your business, your standard property insurance may not kick in. In some instances, simply operating a vehicle rental business could mean your property is now categorized as commercial for insurance purposes. Do your research to ensure that you are properly covered.
General Liability Insurance
Anyone who operates a business should have general liability insurance coverage. This is the policy that protects you when other parties file claims of property damage, personal injury, or other losses. This is the policy that pays for claims that arise outside of an auto mobile accident.
This may or may not apply to you. Worker comp is generally meant to cover employees if they are injured on the job. It will pay for any expenses incurred due to the injury, including medical bills. In some cases, a workman’s comp will also pay the employee’s salary while they are unable to work.
Business Interruption Coverage
If something happens that forces you to cease or slow down your business operations, business interruption insurance can help. For example, a storm washing away your car might make your vehicles inaccessible to drivers, and unavailable for rent. This insurance will help compensate you for any income you lose during this time.
Excess Liability Coverage
This is supplemental coverage for your general liability policy. This will increase your coverage in case your liability exceeds the maximum limits of that policy. This is especially helpful as car rental businesses are considered to be high risk.
Keep in mind that you don’t have to purchase each of these policies separately. In many cases, you can purchase a business owners policy. This bundles the coverage you need into a single binder. This is less complex to manage, and will likely save you money.
The coverage mentioned above should be available through any company that sells business insurance. However, don’t forget to inquire with your commercial fleet insurance broker. They may be able to cover all of your needs, including your vehicle coverage. Keep reading for more details on this.
Commercial Fleet Insurance
Whether you have a single car to rent or an entire fleet, you need to find the right insurance so that your vehicles are covered. Commercial fleet insurance will cover all the vehicles you make available for rentals.
The majority of businesses that own vehicles simply need to purchase a commercial auto insurance policy for each car. This will protect them and any employees from being held liable for any damages that happen when the vehicle is being used.
Your commercial fleet insurance will have many of the same coverage details. This includes ensuring that you meet statutory minimum requirements. For example, it will cover you and any employees when you drive them for business purposes. The difference is that commercial auto policies cover use of multiple vehicles that are used as part of the daily operations of a business while you are providing your vehicles for use by an independent operator or another business.
What details should you look for when you purchase a fleet insurance policy for a car rental business? Your insurance provider will be able to answer specific questions about your needs, but the following will give you some general ideas:
This is liability coverage that specifically covers your fleet vehicles. This is in place to compensate third parties from any damage or injury caused to themselves or their property from the use of your vehicles.
If someone is injured in an accident in one of your cars, medical payments insurance will cover their medical bills and related expenses. This coverage kicks in no matter who is determined to be at fault.
This is the portion of your coverage that will cover loss or damage to your cars if they are involved in any sort of collision. Most policies will cover both repair and loss.
This coverage will ensure you are protected in the event of damage to your fleet vehicles or loss.
Uninsured Motorist Coverage
This coverage protects you if anyone in your vehicle is in an accident with an uninsured driver. This policy will also cover under insured drivers who don’t have coverage limits to pay for any repair or replacement costs. Uninsured motorist coverage also kicks in if there is a hit-and-run accident, and you don’t have information about the other driver.
Roadside Assistance Insurance
Many insurance companies offer roadside assistance policies. This will pay for work on your car roadside, towing fees, and any other tasks required to get your vehicle back on the road.
When your fleet vehicles are damaged in ways that are not covered by other policies, you will need comprehensive coverage. This includes theft, natural disasters, and vandalism.
Keep in mind that commercial fleet insurance policies are not one-size-fits-all. They will be customized according to your specific needs. That’s why it’s important to list the features that you need before you speak with an agent. You’ll be able to quickly identify who can meet your needs.
You may decide to include some specialty add-on policies to your coverage. For example, you can cover accessories such as satellite radios or GPS to your vehicles, then purchase special insurance to cover these items. This will help to protect from any damage or loss done to items you add to vehicles to make them more attractive to ride-share drivers. You can also purchase a garage liability policy that will cover routine repairs and maintenance.
Many car rental companies purchase supplemental insurance policies. These can be upsold to customers renting your vehicles. There are three types of these policies that are available with a car rental business insurance policy:
Personal Accident Insurance
This is often labeled as PAI in car rental agreement documents. This covers the renter and any passengers if there is an accident that causes death or injury.
Supplemental Liability Insurance
This is additional coverage that protects the rental car driver if they cause injury or property damage to a third party.
Personal Effects Insurance
If the person who is renting your car has their personal property damaged or stolen while they use your car, this coverage will protect them.
No matter how many cars you own or make available to rent, you have to decide on the specific coverage you want to carry for your vehicles. It’s also up to you to determine what your coverage limits will be.
Cost of Car Rental Business Insurance
Now, you should have a handle on any commercial insurance you need in order to be covered for your business. Still, you may be wondering how much all of this will cost.
There’s no real way to quantify that for you. The cost of your insurance will depend on your location, number of vehicles, and the details of those vehicles. Of course, the specific types and amounts of coverage will impact your final price as well.
We recommend bundling your policies into a comprehensive plan for business owners. This is likely to save you money, and allow you to manage your policies from a single source.
Commercial Fleet Insurance Cost
Like your commercial insurance, your fleet insurance rates will also vary. Some of the elements listed under business insurance costs will come into play. However, the biggest factor will be the details of your vehicle or fleet. Before you speak to an agent or shop online, be sure you know the number of cars you plan to rent, the year make and model of each, the value of each vehicle, and any accessories that you want to insure as well.
Many business owners who rent vehicles to rideshare drivers opt to pass some of their insurance costs onto the drivers. This is expected. Still, you can position yourself much more competitively if you can minimize those costs, and charge lower rental rates. This can be done through choosing bundled coverage options, and following our recommendation to choose a company that specializes in rideshare or delivery platform rental insurance like Period X.
Once you know your total insurance costs, you can break things down. For example, you can calculate your cost per diem, or determine the amount of cost per vehicle per month. This will help you calculate how much you need to charge to cover these expenses.