Last Updated: May 17, 2024, 8:44 am by TRUiC Team

Party Rental Insurance

Getting party rental business insurance is essential.

Party rental companies need to be protected against things like personal injury and breach of contract.

For example, a customer could be injured and claim that the injury was caused by equipment that wasn't safe. Insurance could cover legal fees, regardless of the verdict.

We’ll help you find the most personalized and affordable coverage for your unique business.

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Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Party Rental Business

General liability insurance is — generally speaking — one of the most important insurance policies for party rental companies. 

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While a general liability policy offers fairly comprehensive protection, it may not cover all the risks associated with running a party rental company. As such, you may want to consider supplementing your insurance coverage with the following policies:

  • Party Rental Insurance: This is a specific type of insurance that party rental businesses can purchase to protect their business and equipment. Party rental insurance is a key element in safeguarding the business from potential damages or injuries during events.
  • Equipment Rental Insurance Coverage: This provides coverage for the equipment and inventory rented out by the party rental business, for example, during a children's birthday party. The importance of having equipment rental insurance in place is to protect a business owner against damages or loss of equipment during rentals.
  • Business Income Coverage: This type of insurance provides financial protection in case of a significant business interruption, such as a natural disaster or a major power outage. It covers expenses such as lost income, relocation costs, and extra expenses incurred during the recovery period.
  • Professional Liability Insurance: This type of insurance provides protection against allegations of professional negligence or failure to provide proper advice or service. In the event of a lawsuit, legal fees and damages will be covered.
  • Workers’ Compensation Insurance: If one of your employees gets sick or injured due to the work they’re performing on the job, this type of insurance will cover their medical bills and related expenses.

Let's Find the Coverage You Need

The best insurers design exactly the coverage you need at the most affordable price.

Cost of General Liability Insurance

The average party rental business in America spends between $500-$1,100 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average general liability insurance expenditure across a variety of industries.

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.

Graph showing average price of general liability insurance prices per industry

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Find the Best Rate

Discover the best coverage at the lowest rate in our affordable business insurance review.

Common Situations That General Liability Insurance May Cover for a Party Rental Business

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Example 1: An adult who’s over the weight limit tries to use an inflatable slide, falling from the top and fracturing their wrist. While the lawsuit they filed against your company is settled in your company’s favor because there are warnings against such use, the suit results in substantial legal fees. General liability insurance would probably cover those fees.

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Example 2: While picking up party supplies at your company’s warehouse, a customer trips over a ball on the floor. They fall on the concrete floor and sustain a concussion. General liability insurance would likely cover medical expenses related to the incident.

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Example 3: Most major venues will only rent equipment from a party rental business that has general liability insurance.

Other Types of Coverage Party 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

Party rental businesses need commercial property insurance both for any building they own and for the equipment that they rent out. Commercial property policies can be adapted to insure either or both types of property. Commercial property insurance is widely available through business owner’s policies (BOPs).

Commercial Auto Insurance

Many party rental businesses bring rental equipment to and from customer locations using company vehicles. Any vehicles that are used for this purpose need to be insured with commercial auto insurance. Commercial auto insurance is available by itself or as part of a package policy.

Commercial Umbrella Insurance

Commercial umbrella insurance provides a secondary level of liability protection for especially expensive claims. Once underlying policies’ limits are reached, this insurance may offer additional protection. The extra protection that commercial umbrella insurance affords is especially important when renting party equipment. Accidents involving certain rented equipment can result in catastrophic injury or even death, and the lawsuits resulting from such accidents are often costly. This insurance offers an affordable way to protect your business against potential lawsuits like these.

Commercial umbrella insurance is available as a standalone policy or as part of a package policy.

Business Interruption Insurance

Recovering from a disaster or other incident can be a lengthy process, and revenue may drop during that process. Business interruption insurance provides supplemental income for businesses during covered disaster recoveries. If your party rental business doesn’t have substantial cash reserves, this coverage could help the business survive a prolonged disaster recovery.

Business interruption insurance is available through BOPs.

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 party 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.

Party 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.

Yes. It is essential for a party rental store to obtain business insurance before launching due to the specific risks it faces. Failing to do so can result in increased liability and financial instability. 

Additionally, some insurance policies, such as workers' compensation insurance, may be legally required, and not having them can put the store in violation of the law.

Not necessarily. Certain exceptions may be written directly into your party 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.