Car rental businesses require a lot of different kinds of insurance. You'll need more than the general liability insurance and workers' compensation insurance that's required of nearly every business. Car rental services should have a comprehensive commercial auto plan. With all those cars riding around, there’s a huge opportunity for some major liability. Make sure you shop around for a plan that won’t bankrupt you but will have you fully covered in the event of an unfortunate mishap.
How to Get Insurance for a Hire Car Business
If you plan on opening a rental car business, there are some insurance requirements, but overall, you’re probably going to want to consider a comprehensive commercial plan. In order to get the best plan, you need to do your research.
Start by looking at the various types of coverage for your car rental business and assess your risk. Next, inquire with reputable, licensed insurance agents to see the average cost near you. After you have a good idea of what the insurance policy you want generally costs, try to haggle with your insurance agent. They have the power to cut some pretty serious deals, especially if you’re buying multiple types of plans.
Consider the following types of insurance before taking the plunge.
Commercial Bodily Injury and Property Damage Liability
Even the best drivers on the planet have accidents. We’re only human, but that’s why the rental business insurance requirements include commercial auto liability. If someone is injured or has property damage from an accident that was caused by one of the cars from your fleet, the injured party can sue both the driver of the vehicle and your rental business. Without the proper rental car business insurance, it could bankrupt you.
Bodily injury and property damage liability helps compensate anyone injured in an accident involving an uninsured vehicle. It also pays for damages done to another vehicle. You may also want to include:
- Personal injury protection
- Uninsured motorist coverage
- Underinsured motorist coverage
Commercial Property Insurance
Your rental cars are the heart and soul of your business. If one of them is damaged in an accident, it can affect your business’s profits. For this reason, the insurance for a hire car business should include physical damage coverage for your vehicles. There are two types for cars, which fall under the larger commercial property insurance umbrella:
- Collision: This covers repairs and replacements in the event that your car is damaged in an accident involving another vehicle or a stationary object. In other words, your vehicle is covered if someone hits a tree or pops a tire running over a curb in the same way your vehicle is covered if someone crashes into another one of the vehicles on your lot (in which case you’d have two insurance claims, so let’s hope this never actually happens).
- Comprehensive: This includes damage from fire, theft and vandalism. It’s important because you don’t know how responsible the people you are renting cars to actually are. They could leave a car accidentally unlocked (because it’s not their property, and they have no investment), which makes your car vulnerable to theft.
You may also wish to purchase a larger commercial property insurance plan that isn't solely for automobiles. This will protect your business location and all of your assets from damage in case of a natural disaster, a fire, vandalism, etc.
General Liability and Workers' Compensation Insurance
General liability insurance is a requirement for any and all businesses. This protects your business, from your office and fleet of cars to parking lots, if something happens on your property. For example, if a customer slips, falls and is injured because you were cleaning and forgot to put up a caution sign, general liability insurance would protect your assets in the event that the customer decides to sue for damages.
Workers' compensation insurance is another coverage that is required by law if you have employees. This basically protects them if they’re injured on the job and can’t work.
Business Income and Extra Expense
This isn’t one of the rental business insurance requirements, but you may wish to have coverage anyway. A business income and extra expense plan protects lost profits if, for example, the roof of your rental car business catches on fire, and you have to close the shop for a few weeks until it is repaired.
Rental Car Business Insurance for Theft
There are two types of commercial insurance coverages that can step in if money is stolen from your business. The first is employee dishonesty insurance, which helps cover the loss of money or property stolen by an employee.
The second is money and securities insurance, which covers against the loss of money or securities in the event of theft, disappearance or destruction. This is often included in comprehensive insurance plans for hire car businesses, and you probably don’t need to purchase it as a stand-alone plan.
Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.