In the rental world, the vehicles used day in and day out are the lifeblood of the business. Just as rental employees would never consider going on a job without all the necessary tools of the trade, they should never drive business vehicles without the right insurance coverage. It is the rental business owner's job to ensure that employees driving commercial vehicles are insured in case of an accident.
Insurance can be complicated and business owners must ensure they have adequate coverage to protect their livelihood. Understanding what coverage and service options are available is the first step toward making better, more informed decisions so that a rental company and its employees are properly protected.
These four steps can help rental owners figure out their commercial auto insurance needs.
- Decide how to buy
Commercial auto coverage is understandably more complicated than private passenger auto coverage. While some business owners are comfortable buying commercial auto policies directly from a company online or on the phone, others choose the in-person counsel of an independent insurance agent.
Independent agents represent multiple companies, so they can offer a choice of coverage packages, prices and service levels that best meet the company's needs. And because rental companies likely have multiple insurance coverage needs — auto, general liability, worker's comp, an umbrella policy, perhaps — they can put together an insurance package that matches up “best of breed” companies so the overall coverage package is made up of specialty insurance providers.
Whether buying online or in person, rental companies must then narrow down companies to consider.
- Select a carrier
A lot of companies offer commercial auto coverage. It's important to select one that meets the needs of the business and the employees. Chances are, getting vehicles back on the road fast is one of those needs. And if getting questions answered at night or on the weekends is a priority, consider that when selecting a company.
Some questions to consider asking include:
- How long has the company offered commercial auto coverage? Are they considered expert in this field?
- How are claims handled? Are they handled by company representatives or contracted third-party representatives? Are the people handling commercial auto claims specially trained?
- Does the company offer 24/7 claims service, ensuring that claims are handled quickly to get drivers back on the road?
- Does the company offer choices in coverage options that meet the business' needs?
- Does the carrier offer flexible payment plans?
- Are there online policy management options?
While price is important it's not the only factor to consider when buying insurance. Getting a damaged vehicle back quickly is critical and choosing a carrier with superior claims service is important.
- Know what to buy
Coverage varies by state; a standard commercial auto policy generally includes those that provide coverage for injury or damage that a driver causes someone else, the driver's injuries, injuries and damages caused by uninsured or underinsured drivers and damage to or theft of the vehicle(s).
What to know:Coverage for injury or damage that a driver causes someone else
- Generally referred to as Bodily Injury and Property Damage liability (BI/PD); covers legal liability, up to the limit of liability the rental owner selects, for an accident in which there is damage or injury to someone else.
- Generally pays for the cost to replace or repair damaged property, the medical bills and wage loss incurred by an injured person, and other damages the rental company is legally obligated to pay as a result of an accident. Does not cover the driver's injuries or damage to the vehicle. If an insurance carrier covers an accident for which the company is sued, they should also pay for a defense lawyer.
- Subject to the “limit of liability” selected. 100/300/50 means the carrier will pay $100,000 for bodily injury per person involved in a claim, $300,000 for bodily injury per accident and $50,000 for property damage.
- Rental owners may instead choose “combined single limits,” (CSL). If the CSL is $300,000, that is the maximum amount the insurance carrier will pay for the total of all damages — bodily injury and property damage — resulting from any one accident.
- Coverage varies by state. Medical payments covers the cost of reasonable and necessary medical care provided as the result of a motor vehicle accident and applies no matter who is at fault.
- The rental owner will be asked to select a limit amount that represents the maximum amount the insurance carrier will pay per accident.
- Personal Injury Protection (PIP), available in some states, generally covers medical bills and often covers wage loss and other costs. PIP coverage is subject to a limit often set by the state and applies no matter who is at fault.
- Uninsured motorists bodily injury and property damage covers medical treatment and damage to the vehicle (and sometimes other property) caused by someone who doesn't have insurance.
- Underinsured motorist bodily injury generally provides protection when the other person has liability insurance, but not enough.
- Collision and comprehensive cover the cost to repair or replace the vehicle if it is stolen or damaged in an accident, regardless of who is at fault. Collision covers when the vehicle collides with another vehicle or object other than an animal. Comprehensive covers damage caused by an event other than a collision, such as fire, theft, vandalism and weather-related damage, as well as crashes with animals.
- Both types of coverage are subject to a deductible; a higher deductible can mean a lower rate, but it's also the amount that the rental company will need to pay first in the event of a claim.
- Know how the policy is priced
Insurance companies generally price to cover the cost of future accidents. To do this, they use information about the drivers, the vehicle(s) and driving histories, along with historical claims information.
Here are some tips for controlling commercial auto insurance costs:
- Driving history influences rates. Business owners should run Motor Vehicle Reports (MVRs) on potential hires. Ask an agent for help with this. While a Commercial Driver's License (CDL) may not be required in certain states to operate the vehicle(s), drivers who have them may be more skilled.
- Proof of prior insurance is important. Never let insurance lapse; if it does, the next policy purchase will likely cost more.
- Ask agent about discounts. There are a lot of them out there, including paid-in-full and renewal discounts.
- Credit. Some insurance companies use information about credit history in helping to determine rates. Ask an agent specifically what information each company looks at to understand what's influencing the premium — positively and negatively.
The bottom line
Be smart about the rental business' commercial auto insurance policy to be certain company employees are covered. Just as rental customers call on the rental center employees as the equipment rental professionals, consider calling on an independent agent as a professional advocating on the company's behalf.
An independent agent can help with all insurance needs, assembling a package that combines insurance companies that specialize in each type of insurance needed, and that provide the necessary level of service at a price that's right.
Chris Homewood is the commercial auto product manager for Mayfield Village, Ohio-based Drive Commercial Auto, a service product of the Progressive Group of Insurance Companies. Drive insures fleets of up to 20 vehicles with policy limits of up to $1 million. For more information, visit www.driveinsurance.com.