Car Rental Business Insurance
Getting car rental business insurance is essential.
Car rental businesses need to be protected against claims of negligent entrustment, breach of contract, and negligent maintenance.
For example, a customer could claim that your improperly maintained rental vehicle caused a serious accident that resulted in bodily harm.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Car Rental Business
General liability insurance is — generally speaking — one of the most important insurance policies for car rental businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Because of the unique risk involved with an auto rental business, you'll need additional policies to ensure optimal protection:
- Commercial Fleet Insurance — Covers damages and liability resulting from accidents involving the rented vehicles (i.e., financial loss due to accident-related expenses, legal fees, or third-party claims).
- Workers’ Compensation Insurance — Covers the medical expenses, lost wages, and rehabilitation costs for employees who’ve suffered work-related injuries or illnesses. This protects the business by limiting the possibility of lawsuits from injured employees.
- Supplemental Liability Insurance — Access to this coverage should be offered by the rental car business to the customer when the car rental business's liability coverage is minimal. It covers property damage.
- Personal Accident Insurance — This coverage should be offered to the customer by the car rental business. It covers additional bodily harm coverage if a passenger of the rental vehicle is injured or dies.
- Uninsured Motorist Coverage — If your renter is underinsured or uninsured, this coverage will pick up where there's left off.
- Business Interruption Coverage — This will cover your business's lost income under varying circumstances.
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Cost of General Liability Insurance
The average car rental company in America spends between $450-$1,000 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a car rental business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Discover the best coverage at the lowest rate in our cheapest business insurance review.
Common Situations That General Liability Insurance May Cover for a Car Rental Business
Example 1: While walking to their rented vehicle, one of your customers slips on ice in the parking lot. The incident causes several injuries, some of which require medical attention. General liability insurance would likely cover the cost of treatment for the injuries.
Example 2: When posting on social media, your company’s manager makes a comparison to another rental car company. The comparison is factually inaccurate and puts your competitors in a bad light. They file a libel lawsuit in response, which general liability insurance would cover.
Example 3: Your car rental company runs an ad in the local newspaper that includes rates you don’t actually offer. Customers file a class action false advertising lawsuit against your company, and the legal fees and settlement are expensive. General liability insurance would probably cover the lawsuit.
Other Types of Coverage Car Rental Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
If your rental car company owns its office space and/or parking lot, those assets should be protected with commercial property insurance. This coverage insures buildings, other structures, and certain equipment (usually not including rental cars).
Commercial property insurance can be purchased through a business owner’s policy (BOP).
Commercial Auto Insurance
Commercial auto insurance is used to insure commercial vehicles, including rental cars. Your rental car company will need this coverage for every vehicle that it owns and rents.
Rental cars tend to have high values because they’re fairly new and have low mileage. Make sure the limits of your company’s rental car insurance equal or exceed the business fleet’s fair market value.
Commercial auto insurance is frequently available through a package policy.
Workers’ Compensation Insurance
Most car rental companies need workers’ compensation insurance because they employ workers. Most states require businesses that have employees to carry workers’ compensation coverage for them. The coverage is a safeguard against injuries and illnesses related to activities at work.
Commercial Umbrella Insurance
If you’d like to protect your car rental company with more liability coverage, you may want commercial umbrella insurance. This insurance provides a secondary layer of liability protection, and limits can often be set in the millions of dollars.
Commercial umbrella insurance is often available through a BOP.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your car rental business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Car Rental Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
As a general rule, yes. It is highly advisable that your car rental business has sufficient business insurance before it starts to operate, as this ensures you are protected from the moment you begin to interact with customers.
Additionally, your business will likely be required to carry some form of auto insurance for your rental cars.
Not necessarily. Certain exceptions may be written directly into your car rental business insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability – that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.