When you operate a car or truck rental company, there are many hazards that could have a serious financial impact on your business, from disasters like fires or storms to customer accidents. It’s a good idea to purchase business insurance to fit your needs and help you feel confident that your business will be protected from the financial consequences of a costly lawsuit or accident.

What insurance coverage do I need for my car rental company?

There are many types of insurance coverage to consider, but these policies are particularly relevant to car rental companies:

General Liability Insurance

General liability insurance is particularly crucial for auto rental companies because of the high number of customers that visit their premises to pick up and drop off rental cars. You could be held liable if someone is injured or their property is damaged at your premises. Although you can reduce the risk of lawsuits by making sure your business is well lit and well maintained, accidents like slips and falls are still common and impossible to completely prevent. 

General liability insurance can protect your company if you are sued with claims of third-party bodily injury or property damage. General liability insurance also features a personal and advertising injury component that can cover third-party non-physical injuries and reputational damage from libel, slander, copyright infringement, and more.

Examples:

• Bodily injury: An employee forgets to put up a wet floor sign after mopping up a spill. A customer slips and falls on the wet floor, sustaining a concussion. 
• Property damage: One of your employees is reparking a rental car and accidentally bumps into a customer’s suitcase, damaging the suitcase and some expensive computer equipment inside. General liability insurance would cover the damages. 

Commercial Auto Insurance

As an auto rental company, you’ll need to protect the value of your entire fleet of vehicles with commercial auto insurance. Because auto rental companies insure large amounts of vehicles and have specific needs, they require specialized auto policies designed for fleets. If you offer vehicles for off-roading or other unusual activities, you will probably need a specialized policy that covers this type of activity as well.

Commercial auto insurance for fleets will provide coverage for third-party bodily injuries and property damage, as well as physical damage to vehicles themselves due to collisions or other hazards. Auto rental companies can reduce the likelihood of liability claims by making sure that all customers are properly insured before allowing them to rent a car and requiring them to sign a hold harmless agreement. Customers’ personal auto insurance will likely cover incidents in rental cars. However, your own liability coverage will still come into play if the costs of a claim exceed your customers’ insurance coverage or if your own employees cause an accident while driving your company’s vehicles. 

Since auto rental companies often store vehicles in open lots, they also have a high risk of damage or loss due to theft, vandalism, hail, wind, and other hazards. Commercial auto insurance can protect the value of the vehicles if they are damaged. 

Example: 

• Someone steals several cars from your auto rental company’s lot. Commercial auto insurance would cover the loss. 

Commercial Property Insurance

Commercial property insurance will protect the value of your business property if it is destroyed or damaged by a covered peril. Coverage includes buildings, furniture, computers, equipment, machinery, supplies, and other property. Commercial property insurance will pay to repair or replace damaged items or rebuild if necessary. Commonly covered causes of loss include fire, theft, storms, hail, explosion, water damage, and vandalism.

Example: 

• A fire breaks out in your repair department, damaging the building and key equipment. Your commercial property insurance would cover repairs to the building and replacement equipment. 

Business Interruption Insurance

Business interruption insurance, also called business income insurance, is a common addition to a commercial property policy that covers your business’s lost income and operating expenses if you are forced to temporarily close due to property damage from a covered peril. Auto rental operations are not easily moved, and if a major disaster damaged your business, you would likely have difficulty continuing to do business—yet you would still need to pay fixed operating expenses like rent, utilities, and payroll. Business interruption coverage can step in to cover those costs while your business is forced to close.

Example: 

• A severe storm causes a tree to collapse on your auto rental business’s office, damaging its roof and breaking windows. You are unable to operate until repairs are made. Business interruption insurance would cover your operating expenses and lost income.

Commercial Crime Insurance

Commercial crime insurance provides funds to reimburse you for losses caused by theft, robbery, fraud, forgery, burglary, and other crimes. This coverage applies both to crimes committed by outside parties and crimes committed by your own employees. Rental operations typically involve many financial transactions, which can leave companies vulnerable to theft or fraud, whether by employees or outside parties. Commercial crime insurance can provide financial protection from crime-related losses.

Example: 

• You discover that one of your employees had been writing fraudulent checks, stealing $10,000 over a period of several months. Your commercial crime insurance would cover the loss.

Workers’ Compensation Insurance

Workers’ compensation insurance provides financial and medical benefits for your employees or their survivors in the case of a work-related injury, illness, or death. This coverage is legally required in almost all states, and there may be serious fines or penalties for companies that do not comply with state regulations. If your auto rental facility operates a service center or car wash, there is a higher risk of employee injuries, so it’s especially crucial to ensure that you have sufficient workers’ comp coverage. 

Example: 

• One of the employees in your service department accidentally cuts himself badly while performing a repair. Your workers’ comp insurance would cover medical bills and a portion of lost income while the employee is recovering and unable to work.

Pollution Liability Insurance

Pollution liability insurance covers bodily injury, property damage, and cleanup costs caused by pollutants that are released in the course of your company’s work. Rental car companies often include fueling, auto repair, and car wash facilities, which could lead to the release of pollutants such as gas, used oil, solvents, and other hazardous waste. If your business operations cause pollution-related damage, you may be required to pay for costly cleanup costs and fines. Pollution liability insurance will provide financial support if your company causes environmental damage. If your company has underground storage tanks, you will need an underground storage tank policy. 

Example: 

• One of your gas pipes develops a leak and contaminates soil and groundwater in the area. Your pollution liability insurance would cover damages and legal fees.

Garagekeepers Insurance

Garagekeepers insurance protects the value of your customers’ vehicles while they are left in your care. For auto rental companies, this becomes relevant if customers leave their vehicles parked on your property while they use a rental vehicle, such as a truck. If an unexpected disaster damages a customer’s vehicle while it is in your care, garagekeepers insurance will reimburse you for the damages.

Example: 

• A customer leaves her car parked at your truck rental business while she is using a rented truck. One of your employees accidentally backs into her car while moving a truck, damaging the car. Garagekeepers insurance would provide funds to cover the damage to the customer’s car. 

Additional Coverages

• A business owner’s policy combines general liability, property, business income, and extra expense coverage into a single package, which is often cheaper than purchasing similar coverage separately. This can be a good choice for qualifying small or midsize auto rental companies. 
• Cyber liability insurance can cover financial losses that result from cyber events such as data breaches, hacking, viruses, denial of service attacks, and more. This is an important coverage to consider for auto rental companies since they may store customers’ credit card numbers and other personally identifiable information.
• Employment practices liability insurance (EPLI) protects your business against lawsuits by employees who accuse your business of wrongful treatment, including discrimination, harassment, or other employment-related issues.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a car rental business with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for auto rental businesses:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

A major disaster or customer lawsuit could severely jeopardize your auto rental business’s ability to continue operating. Securing a range of business insurance is an important part of managing your risks. The right insurance policies can provide valuable financial protection that will help your business weather any unexpected catastrophes or lawsuits, allowing you to focus on growing your business.